The International Monetary Fund (IMF) and Bank of England have both sounded the alarm about AI-related stock prices.
NAS 100 – Daily Chart
The NAS 100 has touched new highs near the 25,200 level, aligning with some recent highs. The 24,000 level can be seen as the first support, with the 22,145 level as the second if there’s a deeper correction.
As the AI sector continues to rise in value, officials from some of the world’s top financial institutions are concerned.
“If you think of a bubble of about five stages, we’re probably in stage three,” Joost van Leenders, senior investment strategist at Dutch asset manager Van Lanschot Kempen, said.
Speaking on Wednesday ahead of the IMF’s annual meeting next week, IMF chief Kristalina Georgieva offered some harsh advice for investors: “Buckle up: uncertainty is the new normal and it is here to stay”.
Georgieva said that although the economy was projected to slow “only slightly” this year and next, there were “worrying signs” that other shocks could test the markets.
The BOE, OpenAI’s Sam Altman, JPMorgan CEO Jamie Dimon and Fed Chair Jerome Powell have also shown concern over a potential stock market correction.
Dimon said he was “far more worried than others” about a serious correction and said it could happen in the next six months.
“The way I look at it is AI is real, AI in total will pay off,’ Dimon added. “Just like cars in total paid off, and TVs in total paid off, but most people involved in them didn’t do well”.
The BoE’s Financial Policy Committee (FPC) compared the stock market and the mania for so-called ‘Dotcom’ stocks 25 years ago, saying that valuations “appear stretched, particularly for technology companies focused on artificial intelligence”.
However, the momentum still favours the bulls until something materially changes in the market sentiment. China stocks jumped to the highest levels in over a decade on Thursday, driven by the same themes of semiconductors, gold, and AI.
