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IMF economist warns AI boom may echo dot-com bust but unlikely to trigger financial crisis

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The U.S. artificial intelligence investment boom could end in a dot-com-style market correction, but it is unlikely to spark a systemic financial crisis, according to Pierre-Olivier Gourinchas, chief economist at the International Monetary Fund (IMF).

Speaking at the start of the IMF and World Bank annual meetings in Washington, Gourinchas told Reuters that the AI frenzy mirrors the late 1990s internet bubble, with surging stock valuations and paper wealth driving consumption and inflation. “This is not financed by debt,” he said, adding that a potential crash would hurt shareholders and equity holders, but not destabilize the broader banking system.

The IMF said investment in AI chips, data centers, and computing infrastructure has fueled optimism about future productivity gains, though these benefits have yet to materialize. Unlike the dot-com era — when technology investment jumped 1.2% of U.S. GDP between 1995 and 2000 — AI-related spending has so far increased by only 0.4% of GDP since 2022.

While the IMF does not expect a direct threat to financial stability, Gourinchas cautioned that a correction could trigger a broader repricing of assets and stress on non-bank financial institutions.

The IMF’s latest World Economic Outlook noted that AI investment, alongside lower-than-expected tariffs and easier financial conditions, has helped sustain global growth. However, Gourinchas warned that AI-driven spending and consumption could add to inflation pressures without corresponding productivity gains.

The IMF now projects U.S. inflation to ease more slowly, reaching 2.7% in 2025 and 2.4% in 2026, above the Federal Reserve’s 2% target. He added that the lingering effects of tariffs and reduced immigration are constraining supply and keeping prices elevated.

GE Vernova to Sell Proficy to TPG for $600 Million, Refocus on Grid Software

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GE Vernova announced Thursday it will sell its Proficy industrial software unit to private equity firm TPG for $600 million, with plans to reinvest the proceeds into its grid software business.

Proficy, which represents about 20% of GE Vernova’s electrification software revenue, helps manufacturers monitor and optimize production. In 2024, the company’s electrification segment generated $7.55 billion in revenue.

The sale comes as GE Vernova, spun off from General Electric last year, works to manage higher costs tied to tariffs and inflation. The company has projected an additional $300–$400 million in costs for 2025 and is raising prices and streamlining operations to protect margins.

CEO Scott Strazik said at a Morgan Stanley conference that while Proficy is a valuable business, GE Vernova sees more strategic upside in grid-focused technology. “Indirectly, we are going to reinvest the proceeds into the grid software business,” he said.

Deal Details

  • The transaction is expected to close in the first half of 2026.

  • TPG will acquire and control Proficy through TPG Capital, its U.S. and European private equity platform.

  • GE Vernova will retain a board observer seat and could receive additional proceeds depending on future outcomes and conditions.

  • The sale will establish Proficy as a standalone software company under TPG ownership.

Market Context

Analysts said the divestiture reflects GE Vernova’s efforts to monetize undervalued assets while channeling resources into growth areas like grid modernization. RBC Capital Markets analyst Christopher Dendrinos called the move “strategic,” noting the strong demand for manufacturing and electrification investments.

Shares of GE Vernova fell 3.2% to $622.77 after the announcement.

The company is also boosting its supply chain capacity, including a $600 million upgrade to U.S. factories announced in January, to keep pace with rising global electricity demand.

Bangladesh to Secure Starlink Deal for Nationwide Internet Access

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Bangladesh’s interim leader, Muhammad Yunus, announced on Tuesday that the country expects to finalize a commercial agreement with SpaceX’s satellite internet network, Starlink, within three months. The deal aims to provide reliable, uninterrupted internet services across the South Asian nation, ensuring that future political upheavals will not disrupt access.

Yunus, who took charge of Bangladesh’s government in August following the ouster of Prime Minister Sheikh Hasina, highlighted that Starlink’s satellite-based technology would make it impossible for any government to block internet access or restrict citizens from the digital world. This comes after widespread protests in July 2024, during which authorities suspended internet and text messaging services across the country.

“If Starlink is launched, no government will have the ability to shut down internet access or lock citizens out of the digital world,” Yunus stated in a televised speech ahead of Independence Day. He also noted that inflation remains the government’s top challenge, though it had dropped to 9.32% in February, the lowest in 22 months, with hopes of reducing it below 8% by June.

Yunus confirmed that national elections will be held between December 2025 and June 2026, aiming for the most free, fair, and acceptable election in Bangladesh’s history.