AI Investment Surge Leaves Markets Vulnerable, Says Fitch

The AI boom and the risk of a correction are emerging as major global credit risks, ratings agency Fitch has warned, adding to growing concerns that soaring tech valuations and unprecedented AI spending may be running ahead of uncertain future returns. In its third-quarter Global Risk Outlook, Fitch said the credit backdrop remains dominated by two short-term risks: Mounting vulnerability to an AI-related market correction and continued uncertainty linked to the US-Iran conflict.

The ratings agency echoed recent warnings from global watchdogs that the AI boom has become increasingly intertwined with economic growth and with capital markets, particularly in the United States, raising the risks of any major selloff. “The scale of AI investment is such that the exposure of the economy and overall capital market to such a correction is significant,” Fitch said.

The warning, which is the bluntest so far from any major ratings firm, came as Asia’s AI-linked stocks tanked again on Tuesday amid the worries about who’s paying for the spending boom and evidence of growing competition from China.

Fitch’s report highlighted that the US S&P 500’s cyclically adjusted price-to-earnings ratio has climbed to levels close to those seen during the late-1990s dotcom boom, while US corporate bond issuance surged 26 percent in the first half of 2026, driven largely by AI-related fundraising.

Amazon, Alphabet, Nvidia, Meta, Oracle and SpaceX together issued $182 billion of investment-grade bonds, while capital expenditure by Alphabet, Amazon, Meta and Microsoft is projected to jump more than 75 percent this year to $700 billion, Fitch said.

It estimated that booming IT investment directly added 1.4 percentage points to first-quarter US GDP growth, while rising equity prices have also helped support household spending through a wealth effect. However, uncertainty over future AI revenues, regulation, competition and labor-market disruption could trigger a potentially significant and prolonged market correction, with widespread macroeconomic implications.“The extent to which capital markets and economies have become intertwined with AI have created a vulnerability for credit,” Fitch said.

Geopolitical risk remains the other major concern, especially with renewed fighting between the US and Iran in recent weeks and a fresh closure of the Strait of Hormuz. Fitch expects world growth to slow to 2.4 percent in 2026 and forecasts US inflation will end the year at 3.7 percent, reflecting the impact of higher energy prices.