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The United States’s artificial intelligence (AI) investment boom might be an economic bubble that could burst, comparable to the dot-com bust in the early 2000s, according to the International Monetary Fund.

The IMF’s chief economist, Pierre-Olivier Gourinchas, forecasted that the bust would be less likely to be a systemic event that would crater the US or global economy.

There are many similarities between the late 1990s internet stock bubble and the current AI boom, with both eras pushing stock valuations and capital gains wealth to new heights, fueling consumption that added to inflation pressures, Gourinchas told the Reuters news agency in an interview.

Then, as now, the promise of a new, transformative technology ultimately may not meet market expectations in the near-term and trigger a crash in stock valuations, he said. But just as in 1999, investment in the sector is not built on leverage, but by cash-rich tech companies.

“This is not financed by debt, and that means that if there is a market correction, some shareholders, some equity holders, may lose out,” Gourinchas said at the start of the IMF and World Bank annual meetings in Washington.

“But it doesn’t necessarily transmit to the broader financial system and create impairments in the banking system or in the financial system more broadly,” he added.

Tech firms are pouring hundreds of billions of dollars into AI chips, computing power, data centres and other infrastructure in a race to deploy the technology that promises massive productivity gains.

Gourinchas said these gains have not yet been realised in the economy, just as the lofty valuations of internet stocks in the late 1990s were often not based on actual revenues, leading to the dot-com bust in 2000 and a shallow US recession in 2001.

But the current scale of the AI boom is smaller than the dot-com era, with AI-related investment increasing by less than 0.4 percent of US GDP since 2022, compared with the dot-com era’s investment increase of 1.2 percent between 1995 and 2000, according to data compiled by the IMF.

While the direct impact on financial stability may be limited, Gourinchas said there was a possibility an AI correction could trigger a shift in sentiment and risk tolerance that could lead to broader repricing of assets that could put stress on non-bank financial institutions.

“But it’s not a direct link. We’re not seeing enormous links from the debt channel,” Gourinchas added.

AI investments propping up economy

Excessive leverage at the height of the US property bubble in 2008 helped bring on the global financial crisis, causing multiple large bank failures and triggering the deepest recession since the Great Depression of the 1930s.

The IMF’s World Economic Outlook, released on Tuesday, cited the AI investment boom as one of the factors propping up US and global growth this year, along with US tariff rates coming in lower than feared and easier financial conditions prompted in part by dollar depreciation.

But Gourinchas said the added investment and consumption are helping to elevate demand and inflation pressures without associated productivity gains, even as non-tech investment falls, due in part to uncertainty over US President Donald Trump’s tariffs.

The IMF is forecasting a smaller decline in US consumer price inflation for 2025 to 2.7 percent, declining only to 2.4 percent in 2026, Gourinchas said. A year ago, the IMF had forecast that US inflation would be back to the Federal Reserve’s 2 percent target level this year.

Among other factors keeping inflation elevated are reduced US immigration, which limits the labour supply, and the delayed effect of tariffs on consumer prices.

“Now, the effect of tariffs is kind of trickling in. So far, the evidence suggests that importers have absorbed it in margins, and they have not transmitted as much to the ultimate customers,” Gourinchas said. “It has not been paid by the exporters.”

Trump famously predicted that foreign countries would pay the price of his protectionist policies, wagering that exporters would absorb that cost just to keep a foothold in the world’s largest consumer market.

Gourinchas’s assessment agrees with the view of academic studies, surveys and business leaders that companies on the US side of the border are eating the tariffs.

While much of the globe’s attention remains on the Gaza ceasefire deal, less than 33 kilometres (21 miles) away, Israeli settlers, often backed by soldiers, continue daily assaults and raids across the occupied West Bank.

On Monday night, Israeli settlers uprooted 150 olive trees in the village of Bardala, in the northern Jordan Valley, destroying the livelihood of several families.

Settlers regularly seize Bardala’s land, burn property and destroy crops in an effort to take over Palestinian land, expand illegal Israeli settlements, and intimidate local communities into leaving.

Earlier on Monday, settlers attacked Palestinian farmers in Beit Fajjar, south of Bethlehem, injuring several of them. Witnesses said the attackers hurled stones, sicced dogs on people, and set fire to vehicles.

Settler attacks on the rise

Since Israel’s war on Gaza began in October 2023, violence by Israeli settlers in the occupied West Bank has steadily risen.

According to data from the United Nations Office for the Coordination of Humanitarian Affairs (OCHA), settlers have attacked Palestinians nearly 3,000 times in the occupied West Bank over the past two years.

The number of settler attacks has risen sharply since 2016, with 852 recorded in 2022, 1,291 in 2023 and 1,449 in 2024.

With more than 1,000 attacks in the first eight months of 2025, this year is on track to become the most violent yet.

Settler attacks often escalate during the olive harvest season from September to November, a vital time of year that provides a key source of livelihood for many Palestinian families.

Who are the Israeli settlers attacking Palestinians?

Israeli settlements are Jewish-only communities built on Palestinian land that Israel occupied in 1967.

Today, between 600,000 and 750,000 settlers live in more than 250 settlements and outposts across the occupied West Bank and East Jerusalem. Many of these are near Palestinian towns and villages, often leading to heightened tensions and severe movement restrictions for Palestinians.

Settlers are often armed and frequently accompanied or protected by Israeli soldiers. In addition to destroying Palestinian property, they have carried out arson attacks and killed Palestinian residents.

Where have settlers attacked in the occupied West Bank?

Every West Bank governorate has faced settler attacks over the past two years. Data from OCHA shows that between January 2024 and August 2025, the Ramallah and el-Bireh governorate recorded the highest number of settler attacks with 634 incidents, followed by Nablus with 501 and Hebron with 462.

Most of the settler attacks are in Area C, which makes up more than 60 percent of the occupied West Bank, and are concentrated near Israeli settlements and outposts.

Under the 1993 Oslo Accords, the occupied West Bank was divided into three zones: Area A, under full Palestinian Authority (PA) control; Area B, under PA administrative authority and Israeli security control; and Area C, controlled entirely by Israel.

More than 1,000 Palestinians killed in the West Bank

Since October 7, 2023, more than 1,000 Palestinians have been killed and nearly 10,000 injured across the occupied West Bank by Israeli forces and armed settlers, according to UN figures.

In 2025 alone, OCHA has documented at least 178 Palestinian deaths linked to settler and military violence. The victims include farmers, children and residents caught in near-daily raids and attacks on villages and refugee camps.

The brother of killed Palestinian journalist Saleh Aljafarawi was freed under the Gaza ceasefire deal, only to be told of his brother’s death just a day earlier.