BIS Warns AI Debt Bubble Could Spark Global Financial Crisis

The Bank for International Settlements warned that AI exuberance could have major financial consequences as heavy reliance on debt in AI ventures raises the risk of cascading defaults if investor optimism fades. The five largest hyperscalers are set to spend more than $1 trillion on AI-related capital expenditures from 2025 through 2026, commitments that the Basel-based institution said are outpacing earnings and leaving equity valuations elevated.

Investment enthusiasm has been fuelled by the recent SpaceX IPO and planned public offerings from Anthropic and OpenAI, prompting comparisons with past boom-bust cycles such as electrification in the late 1920s and the dot-com bubble in the late 1990s. The global economy showed surprising resilience in 2025, but the BIS said perils grew in 2026 as persistent inflation—including a US rate of 4.2% in May—combined with growing financial vulnerabilities and weakening fiscal positions.

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