Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), during a curtain-raising speech before the fall meetings of the International Monetary Fund (IMF) and the World Bank at the Milken Institute in Washington, DC, United States, Wednesday, October 8, 2025.
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The International Monetary Fund and the Bank of England are the latest financial institutions to warn that global stock markets could be in trouble if investor appetite for artificial intelligence deteriorates.
Speaking on Wednesday as finance ministers and central banks prepare to meet in Washington for the IMF’s annual meetings next week, IMF chief Kristalina Georgieva offered blunt advice to investors: “Fasten your seat belt: uncertainty is the new normal and it is here to stay.”
Georgieva said that while the global economy was expected to slow only “slightly” this year and next, there were “worrying signs” that market shocks could soon fully test global resilience.
She pointed to rising global demand for gold, with prices for the yellow metal hitting $4,000 an ounce for the first time this week, as an example of investor anxiety.
The IMF chief also cited the full effect of US tariffs and soaring stock market valuations, in a period of AI-driven euphoria, as two other warning signs.
“When it comes to accommodative financial conditions – which mask but do not stop some slowing trends, including in job creation – history tells us that this sentiment can change abruptly,” Georgieva said.
His comments came shortly after the Bank of England warned that the risk of a “sharp market correction” had increased, highlighting that valuations looked stretched, particularly for AI-focused technology companies.
In the minutes of its latest meeting minutes, the central bank said on Wednesday that “negative factors included disappointing progress in AI capabilities/adoption or increased competition, which could lead to a reassessment of currently high future earnings.”
The IMF and BOE join OpenAI’s Sam Altman, JPMorgan boss Jamie Dimon and Federal Reserve Chairman Jerome Powell in warning of the risk of a stock market correction as AI spending increases.
Huge investments in AI
Joost van Leenders, investment strategist at Dutch asset manager Van Lanschot Kempen, said it was probably a coincidence that the IMF and BoE warnings came on the same day, but it was clear their messages were part of a broader pattern.
“We’ve seen comments like this emerge over the last few weeks or months, I think, and we’re seeing huge investments in AI, which basically casts doubt on the profitability of this,” Van Leenders told CNBC’s “Europe Early Edition” on Thursday.
Asked if a market correction seemed imminent, Van Leenders said: “That’s a good question. It’s hard to say. I think when you look at the valuations of big U.S. tech companies, they’re not excessive, for example on a forward P/E basis.”
Forward P/E refers to a market valuation measure by which a company’s current stock price is divided by its projected earnings per share (EPS) for the next 12 months.
“When you look at, for example, investments in AI and the growth of investments, and the fact that some of these companies are financing each other and buying their shares. I think those are also signals of a bubble,” Van Leenders said.
“So if you think about a bubble of about five stages, we’re probably at stage three. As long as there is more demand for AI, as we see from businesses and individuals, I think it can continue. But how high is obviously the big question,” he added.
