Leading financial institutions are worried about a looming AI bubble
Both the International Monetary Fund (IMF) and the Bank of England are warning of an AI bubble that could burst sooner than later, citing soaring valuations and stock prices. Speaking at the Milken Institute in Washington DC, Kristalina Georgieva, managing director of the IMF, said that "uncertainty is the new normal and it is here to stay" and that we should all "buckle up." In discussing financial conditions, she said that "fired up by optimism about the productivity-enhancing potential of AI, global equity prices are surging."
The Bank of England, for its part, has said that "the risk of a sharp market correction has increased," and that "equity market valuations appear stretched, particularly for technology companies focused on artificial intelligence (AI)." It also notes the increasingly common concern that AI might not deliver all that it has promised. A record of a recent Financial Policy Committee meeting at the Bank of England reads, "downside factors included disappointing AI capability/adoption progress or increased competition, which could drive a re-evaluation of currently high expected future earnings."
The AI craze has been in full swing since the release of OpenAI's ChatGPT in 2022 and its explosive growth since then. The chatbot kicked off a flurry of investment, such as Microsoft's multibillion-dollar deal in 2023. And, of course, the biggest tech companies followed OpenAI’s lead with products like Google’s Gemini, Microsoft Copilot and Apple Intelligence.
Since then, the ChatGPT maker has inked hundreds of billions of dollars in purchasing and investment agreements with the likes of AMD and NVIDIA in the race for AI dominance. Competitors like Anthropic, whose CEO thinks AI will replace half of all white-collar jobs within five years, have found the backing of other tech giants like Google and Amazon.
Integrations for AI tools continue to grow, and the proliferation of the technology keeps entering new spaces, like music. There's no telling how everything will play out, but in the meantime AI can help us shop for shoes by looking at our feet.This article originally appeared on Engadget at https://www.engadget.com/ai/leading-financial-institutions-are-worried-about-a-looming-ai-bubble-130827642.html?src=rss
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