- The IMF’s October 2026 report warned an AI market correction poses a large economic risk.
- Brookings Institution estimates US AI tech spending may hit $10.3T between 2025 and 2032.
- IMF warns that global investment could fall by up to 1.3% by 2028 if AI fails to deliver gains.
The IMF (International Monetary Fund) is warning that a big drop in AI investments might not stay contained to tech stocks, as it may spread and hurt global growth and financial stability too.
In its October 2026 Global Financial Stability Report, the IMF flagged a correction in the AI market as a big risk, especially if the earnings and productivity gains investors expect don’t end up justifying current valuations.
Brookings Institution estimates that the US could spend as much as $10.3 trillion on AI infrastructure (data centers, power systems, chips, and similar) between 2025 and 2032. That would represent approximately 3.6% of US GDP annually.
The risk here is that companies might be building out AI infrastructure faster than actual paying demand shows up. If AI revenue and productivity don’t live up to the hype, businesses could hit pause on projects and slash spending, struggling to justify their valuations.
If investment slowdown hits, it would likely ripple through chipmakers, data center operators, cloud providers, and the banks funding their growth.
A Worst-Case Scenario
The IMF looked at a worst-case scenario where AI fails to deliver notable efficiency gains, causing companies (especially in the US) to suddenly cut back on their tech investments.
In that scenario, global investment may drop by up to 1.3% and global GDP by up to 0.4% by 2028. Falling asset prices and tighter financial conditions would make the initial shock even worse.
That being said, if investors everywhere begin doubting whether big tech companies can keep making huge profits and start a global sell-off at the same time, it could trigger a much larger stock market drop.
Since a handful of huge tech companies make up a large chunk of the overall US stock market, a price drop in those few stocks might shrink investments across the board, even for portfolios that don’t directly focus on AI.
Additionally, if companies and investors are forced to sell assets to cover what they owe, heavy borrowing and complex financing deals may make the losses even worse.
The IMF is not predicting that the AI boom will inevitably collapse, but recent market activity shows why investors are worried. On October 15, South Korea’s Kospi 200 slid roughly 8%, and Japan’s Nikkei 225 fell about 5%, as semiconductor and AI-related stocks came under pressure.
Related: IMF Warns AI Debt Could Pose Bigger Risk Than Soaring Tech Valuations
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