IMF monitoring AI developments, too early to say if AI reassessment underway

The International Monetary Fund (IMF) is monitoring AI equity valuations and the potential slowdown in data center development due to a shift in US politics, but it is too early to assess if there is a long-term reassessment of the sector, spokesperson Julie Kozack stated at a press briefing. Kozack noted that AI equity valuations remain exposed to a reassessment of the technology's longer-term profitability.

Despite Nvidia CEO Jensen Huang's resignation causing sharp declines in his company's shares and the broader S&P 500 and Nasdaq indexes, some major tech stocks, including rivals Advanced Micro Devices, Alphabet, and Microsoft, experienced gains. Kozack emphasized that the IMF is closely monitoring recent developments' impact on equity markets, the economy, and financial stability, but it is too early to determine if there will be a broader reassessment of AI investment or its profitability.

The IMF views AI investment and data center construction as two major drivers of US inflation, alongside elevated energy prices stemming from the Iran war and the closure of the Strait of Hormuz. The IMF believes that the Federal Reserve will likely maintain restrictive monetary policy to bring inflation back to its 2% target, and the Fed's policy-setting committee is scheduled to meet on December 8-9.