IMF warns AI debt and circular funding could shake global markets

Debt makes the bet harder to unwind

The IMF pointed to growing borrowing as a possible trigger for a correction. Hyperscalers, the largest data-center operators, are taking on more debt, while investors are borrowing to buy shares in AI companies.

The report also highlighted a circular pattern: some of the biggest investors in AI are also among the sector’s largest recipients of funding. Nvidia has agreed to invest $30 billion in OpenAI and provide another $105 billion for OpenAI data-center construction. OpenAI, in turn, is one of Nvidia’s largest customers, using its chips to run and train its models. Some of the money Nvidia commits could therefore return to Nvidia as OpenAI buys more chips.

That can make the system look more durable than it is, while leaving the companies’ financial positions closely linked. The IMF studied 14 such deals made since 2023:

If key companies struggle, the IMF said, revenue forecasts and investment valuations could weaken, reducing the value of debt accumulated through these deals.

The warning lands amid weaker expectations

The IMF’s concern is not limited to an AI-market correction. It also flagged rising government-bond yields and the risk of a major cyberattack on important government and financial institutions, potentially aided by powerful AI models.

The fund is not alone in warning about an AI bubble. But its assessment carries particular weight because it comes from an institution responsible for global economic stability. Concern has sharpened this month after reports that OpenAI’s annualized revenue was $20 billion below expectations, weakening hopes for a near-term path to profitability.

I think the more consequential point is the gap between the scale of the financing and the revenue expected to support it. The IMF’s figures describe commitments, not proof that the promised income will arrive. Yet investment in the sector keeps growing, leaving the global economy increasingly exposed to one area—and to the companies whose spending and sales help sustain each other.