The International Monetary Fund warned Tuesday that an AI-driven market correction could have global consequences, with hyperscalers now behind 10% of investment-grade bond issuance worldwide
The International Monetary Fund warned Tuesday that an AI-driven market correction could have global consequences, with hyperscalers now behind 10% of investment-grade bond issuance worldwide.
Key Points:
- The IMF named an AI selloff, rising bond yields and cyberattacks as near-term threats to markets.
- Hyperscalers' share of global investment-grade bond issuance jumped from less than 1% in 2024 to 10%.
- Banks holding 22% of global banking assets showed weak capital in the fund's latest stress test.
The fund released the main chapter of its Global Financial Stability Report on Tuesday at its annual meetings in Bangkok, warning against complacency in markets that remain resilient for now.
It cautioned that weaker AI profits or spending could drag down related assets and spill into broader markets, listing that scenario among several near-term catalysts for turmoil.
AI investment has so far helped offset the drag from war in the Middle East and policy uncertainty, the IMF said. Yet it pointed to growing evidence that AI may need less capital than planned, or deliver smaller economic gains. That leaves borrowers exposed.
Leverage could deepen any shock through forced selling and higher volatility, the fund said. Hyperscalers' share of global investment-grade bond issuance has climbed from less than 1% in 2024 to 10%.
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"The consequences of an AI correction could be global," the IMF said, urging policymakers to rein in excessive leverage, including derivatives and margin loans, and to put public debt on a sustainable path.
Bond markets add another layer of strain. The fund said those risks have worsened since April, as higher energy prices pushed yields up, while historically high sovereign debt and unresolved deficits in major economies add pressure.
Marc Seidner, chief investment officer of non-traditional strategies at Pacific Investment Management, said AI borrowing has grown "large enough to compete with government bonds for investor capital."
A major cyberattack could also shake confidence in markets, the IMF said. Its stress test of a downturn sparked by an AI slowdown and bond market strain found bank capital broadly robust, but lenders holding 22% of global banking assets had weak buffers, up from 18% in 2025.
The IMF has sounded this alarm before. On Jun. 30, Tobias Adrian, head of the fund's Monetary and Capital Markets Department, told a European Central Bank forum in Portugal that AI debt may pose a bigger stability concern than stock valuations. Markets were not necessarily in a bubble, he said, but the borrowing worried him.
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