The current wave of investments in artificial intelligence (AI) is reminiscent of the dot-com bubble of the late 1990s, the International Monetary Fund's (IMF) chief economist Pierre-Olivier Gourinchas warned on Tuesday.
The stock market values of tech companies, including chip maker Nvidia, have recently soared, and investor enthusiasm reflects the profits these companies are expected to generate in the future, according to Gourinchas.
However, this also means that if these profits fail to materialise, the resulting investor disappointment could lead to lower valuations.
In the late 1990s, shares of internet companies rose sharply, but they lost significant value after 2000 when they failed to meet profitability expectations.
Whether a similar market correction will occur now, "nobody knows," according to Gourinchas. "But our job is to point out risks. This is one such risk."
