An AI-generated image of a fake explosion outside the Pentagon stoked panic and sent stocks tumbling as the hoax spread on social media.

The fake image behind Monday’s chaos shows smoke billowing from the grounds outside the Pentagon … with the image spreading like wildfire online after being shared by tons of accounts, including a Russian state media outlet.

The AI-generated work was often posted with false accounts of an explosion happening at the Pentagon … causing a panic and a stock selloff that saw the S&P 500 drop by 30 points.

The Arlington County Fire Department put out the fire by debunking the image as a hoax.

While some were fooled by the fake Pentagon photo, some weren’t so easily duped … with eagle-eyed accounts pointing out obvious flaws with the AI-generated image, mainly focusing on warped sections of the Pentagon fence.

Remember … AI expert Gary Marcus joined us on “TMZ Live” last week after testifying before Congress about the dangers of AI, warning the futuristic technology has the power to manipulate users and influence ways of thinking.