AI BOOM
This AI boom looks a lot like 1999
The IMF says the surge in US spending on AI looks a lot like the dot-com bubble of the late 1990s - but also says it’s unlikely to crash the whole economy if it bursts, unlike the dot-com bubble.
Chief economist Pierre-Olivier Gourinchas explained that AI hype has pushed stock prices and expectations sky-high, much like the internet boom once did.
The difference this time is that most AI investments come from cash-rich tech firms, not borrowed money, which means there’s less risk of a major financial collapse.
So far, AI spending has added less than 0.4% to the US economy since 2022, much smaller than the dot-com spike of 1.2% between 1995 and 2000.
In short:
The IMF sees echoes of the 1990s tech bubble in today’s AI craze.
The boom isn’t debt-driven, so the risk of a financial meltdown is low.
AI spending is helping growth, but keeping inflation higher for longer.
History: CTRL+C, CTRL+V
Still, if investor confidence drops, it could shake markets and affect financial institutions.
For now, the IMF says AI investments are boosting growth, even as they add pressure on inflation.
It expects US inflation to fall to 2.7% in 2025 and 2.4% in 2026, which is slower than previously hoped.
History doesn’t repeat itself; it just rebrands with GPUs. - MG