IMF warns AI sector wipeout risks global financial contagion

The IMF's Global Financial Stability Report warns that a collapse in the AI sector could hit the global economy by 2028, cutting GDP by 0.4%, investment by 1.3% and consumption by 0.6%. The fund tracked 14 public deals since 2023 in which $300 billion of investment and $650 billion of debt in financially weaker AI firms generated $1.4 trillion in revenue.

• IMF: an AI crash could cut global GDP by 0.4% by 2028
• $300B investment and $650B debt in weaker AI firms generated $1.4T revenue
• Hyperscalers' share of investment-grade bond issuance rose from under 1% to 10%
• Single stocks now make up 28% of leveraged ETFs on AI demand