The International Monetary Fund has warned that a sharp reversal in artificial intelligence investment, rising government bond yields or a major cyberattack could trigger wider stress across global financial markets.
In its latest Global Financial Stability Report, the IMF said markets have remained surprisingly resilient despite war, policy uncertainty and high public debt. But it cautioned that this resilience should not be mistaken for safety.
The Fund said a slowdown in AI profits or investment could force a reassessment of highly valued technology assets. If that correction combines with heavy borrowing or weak market liquidity, the impact could spread well beyond the technology sector.
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AI boom has helped markets, but risks are building
The IMF said AI investment has so far supported economic activity and helped offset some of the drag created by geopolitical tensions and policy uncertainty.
Technology spending has also strengthened demand across semiconductor, cloud and data-centre industries.
But the Fund said there is growing evidence that future AI capabilities may require less investment than previously expected, or that the economic gains may not be as large as markets currently assume.
That matters because investors have already placed enormous valuations on companies expected to benefit from the AI boom.
If expected profits fail to materialise, share prices could fall sharply.
The IMF warned that leverage could amplify such a correction.
Large technology companies are borrowing more heavily to finance AI infrastructure. Hyperscalers now account for about 10% of global investment-grade bond issuance, compared with less than 1% in 2024.
That means an AI slowdown could affect both stock and bond markets at the same time.
A sudden fall in prices could also force leveraged investors to sell assets quickly, adding further volatility.
Why rising bond yields worry the IMF
The IMF’s second major concern is the government bond market.
Bond yields rise when investors demand higher returns to hold government debt.
That may happen because inflation is increasing, public borrowing is high or investors are becoming less confident about a country’s finances.
Higher yields sound positive for investors buying new bonds, but they can create problems across the financial system.
When yields rise sharply, the price of existing bonds falls. Banks, pension funds, insurers and investment firms that hold those bonds can suffer losses.
Governments also face higher borrowing costs when old debt must be refinanced.
The IMF said bond-market risks have increased since its April assessment.
Higher energy prices are adding to inflation pressure, while many governments are already carrying historically high debt and persistent fiscal deficits.
If central banks are forced to keep interest rates high, refinancing that debt could become even more expensive.
The Fund warned that a disorderly rise in yields could reduce market liquidity and spread stress across asset classes.
Cyberattacks emerge as a third market threat
The IMF also placed cyber risk alongside AI corrections and rising bond yields as a major near-term concern.
Financial institutions increasingly depend on a small number of cloud, software and technology providers.
That concentration creates efficiency, but it also means a serious failure at one provider could affect many institutions at once.
The IMF said more than 70% of software vulnerabilities exploited so far in 2026 were attacked before vendors had meaningful time to issue a fix.
That was around 20 percentage points higher than a year earlier.
AI makes the picture more complicated.
Banks and cybersecurity firms can use AI to detect attacks faster, but criminals can also use the same tools to automate phishing, discover vulnerabilities and improve malicious code.
A major attack affecting a critical financial provider could damage confidence and quickly disrupt markets.
The IMF therefore urged regulators to strengthen oversight of third-party technology vendors and improve cyber resilience.
Banks remain resilient, but weak spots are growing
The IMF’s stress tests suggest that the global banking system remains broadly resilient even under a scenario involving an AI downturn and bond-market stress.
But the results also show growing pockets of weakness.
Banks representing 22% of global banking assets were found to have weak capital cushions under the IMF’s stress scenario.
That is up from 18% in the previous assessment.
The increase does not mean a banking crisis is imminent.
But it shows that some institutions would have less room to absorb losses if several shocks arrive at the same time.
The Fund’s central message is therefore not that one specific crisis is about to occur.
It is that markets are increasingly exposed to several risks that could reinforce one another.
An AI sell-off could weaken investor confidence, rising yields could create balance-sheet losses, and a cyberattack could disrupt already stressed financial systems.
What this means for you:
Investors should not treat the AI boom or recent market resilience as guarantees that risks have disappeared. Sharp moves in technology stocks, bond yields or major cyber incidents can increasingly affect multiple parts of the financial system at once.
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