Fitch Warns AI Market Correction Poses Major Global Credit Risk
Ratings agency Fitch has warned that the rapid growth of artificial intelligence (AI) investment is creating a significant global credit risk, with concerns mounting over whether soaring tech valuations and unprecedented spending are outpacing future returns. In its third-quarter Global Risk Outlook report, Fitch highlighted an AI-related market correction as one of two key short-term risks alongside U.S.-Iran geopolitical tensions. The agency noted that the S&P 500's cyclically adjusted price-to-earnings ratio is nearing levels seen during the dotcom boom. It also reported a surge in corporate bond issuance, with major tech firms like Amazon and Alphabet raising $182 billion through investment-grade bonds. Fitch estimated AI-related capital spending alone added to U.S. GDP growth but warned that uncertainty around regulation, competition, and revenue could lead to a prolonged market correction. In addition to the AI risk, Fitch cited geopolitical tensions between the U.S. and Iran as well as an emerging El Niño weather pattern as potential threats to global credit stability.
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Topics: AI capital markets credit risk ratings agencies tech valuations