BIS Warns $1 Trillion AI Spending Boom Could End in Prolonged Bust
Updated
Updated · Financial Times · Jun 28
BIS Warns $1 Trillion AI Spending Boom Could End in Prolonged Bust
3 articles · Updated · Financial Times · Jun 28
Summary
$1 trillion in planned AI spending by the five biggest hyperscalers through 2026 could flip into a prolonged investment bust if returns disappoint, the BIS said in its annual report.
Hundreds of billions of dollars in fresh debt and equity have financed the buildout, with tight credit spreads and record-high stock prices encouraging AI-linked issuance that could reverse abruptly.
SpaceX's $86 billion IPO and subsequent $25 billion bond sale have become symbols of that froth, as investors already face volatility and rising expectations for Federal Reserve rate increases.
The BIS said past technology booms—from 1840s railways to the late-1990s dotcom era—also drew more capital than commercial returns justified and ended in investment reversals and recessions.
A sharp AI-led correction could hit harder now because households hold more equities and AI companies have sold large volumes of debt, while persistent inflation from Strait of Hormuz disruption adds to global risks.