Asset management giant: The market's expectations for AI productivity are overly optimistic

The chief economist of Allianz, one of the world’s largest insurance and asset management groups, has warned that the market expectations for AI-driven productivity improvements are showing signs of irrational exuberance, and that the actual impact of AI on the real economy will be far more complex and uneven than reflected in market pricing.

On July 3, Bloomberg reported that Ludovic Subran, Allianz’s chief economist, stated at an annual economic conference in France, “We do not really know the degree of AI adoption or how it will affect the real economy, but the market is already extremely optimistic, especially regarding productivity improvements — whereas the reality will be a more mixed scenario. For me, this is exactly where I see a certain degree of irrational exuberance.” He also expressed concern about the overall ‘market psychology’ surrounding AI investments.

Subran’s comments echo those made earlier this week by IMF officials and align with warnings from the Bank for International Settlements (BIS) last Sunday — the BIS has listed AI as one of four major ‘pressure points’ threatening global economic prosperity.

AI’s impact will be a “mixed scenario,” not an across-the-board windfall as the market expects

Subran acknowledged that the change AI heralds will be revolutionary, calling it a “Renaissance moment,” and noted that AI will profoundly alter the service economy. However, he also emphasized that this technology has led to some “strange phenomena” in corporate and investor behavior.

His core judgment is that AI’s impact on various economies will not be evenly distributed. The market’s current optimism is built on the assumption that productivity will improve comprehensively and quickly, but the reality will be a “mixed scenario”—different industries and companies will benefit to varying degrees, which is at odds with the current overall logic of market pricing.

Subran pointed to the rapidly expanding capital expenditures in the US AI sector. He cited a similar judgment to IMF officials, specifically criticizing some companies for falling into a “debt expansion cycle”—massive capital investments are driving up debt, while the timeframe and scale of investment returns are highly uncertain.

An article from Wallstreetcn notes that Tobias Adrian, Director of the IMF Monetary and Capital Markets Department, said that current AI-related stock valuations may not yet constitute a bubble, but what really deserves vigilance from financial regulators is that global tech giants are raising more mid- to long-term debt to invest heavily in fast-evolving AI infrastructure. This mismatch between asset and liability maturities is the potential source of future financial stability risks.

Earlier, Wallstreetcn wrote on June 29 that the BIS warned of the three major threats: AI bubble bursts, inflation, and sovereign debt. The report highlighted that AI’s “circular financing” structure is opaque and carries risks of multiple pledging of assets. When the tide recedes, it could trigger a credit tsunami on the scale of 2008. Coupled with elevated risks of secondary inflation effects and highly leveraged basis trades by hedge funds, which can easily induce forced deleveraging and fire sales, global financial system vulnerabilities are increasing.

Subran particularly noted the polarization of corporate behavior: firms like Apple and Microsoft are making few moves in AI, while other companies are “over-investing.” This polarization itself, in his view, is already a sign of structural imbalance in the market.

“If you issue debt to reward shareholders, to me that's not a good sign,” Subran said. He also expressed specific concerns about potential risks to data centers, including the risk of technological obsolescence faced by some data centers and the logic of monetizing capital expenditures.

Subran observed a clear divergence between the pricing of AI risk in equity and bond markets. In the bond market, he believes investors remain relatively rational — “When you look at the credit spreads of sector companies, especially hyperscalers, they are more cautious than before,” he said. He noted that the bond market has not shown signs of complacency and that “there are still plenty of debt vigilantes in the bond market.”

However, the situation is quite different in the stock market. “On the equity side, it seems the sky’s the limit, which of course isn’t true,” Subran said bluntly. This stock-bond divergence, in his view, is the most vivid manifestation of irrational exuberance in the current AI investment boom — stock market pricing reflects the most optimistic scenario, while the caution in the bond market highlights ongoing real-world constraints.

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