The Bank for International Settlements placed the artificial-intelligence capital-spending boom on a short list of threats to global prosperity, ranking it alongside the inflation shock from the closure of the Strait of Hormuz, the spread of private credit and the fragility of sovereign-bond markets in its Annual Economic Report 2026.
The Basel-based institution, often called the central bank of central banks, is the most senior official voice yet to warn that the AI capital-spending surge may be running ahead of what commercial returns can justify. The warning lands the same week Oracle dropped 19 percent and veteran investor Jeremy Grantham renewed a bubble call, but where those were market and money-manager voices, the BIS speaks for the world's central banks.
Four pressure points
The report identified what it called four pressure points. Inflation tops the list. Prices of plastics and fertilisers, two key industrial inputs, have risen 30 percent and 50 percent respectively since the Middle East conflict began, the BIS said, and "further volatility in energy prices could arise" as oil physical markets work off the disruption. Policy rates are higher than they were in 2022, the report noted, but "memories of the post-pandemic inflation surge are still fresh" and inflation expectations "could de-anchor more quickly than in the past."
The second is the AI boom itself. The report said the current surge in capital expenditure "could prove unsustainable if supply bottlenecks restrain production," and that intense competition for market leadership may fuel overinvestment further, "as seen in previous innovation waves." A companion BIS Bulletin published in January, written by economists Inaki Aldasoro, Sebastian Doerr and Daniel Rees, found that hyperscalers' gross corporate-bond issuance topped $100 billion in 2025, most of it at maturities of more than five years. "The fact that equity prices have run far ahead of debt market pricing underscores this tension," the bulletin said.
The third is financial vulnerability. The BIS flagged "compressed risk premia and stretched valuations," "increasingly opaque financing of AI activities," high leverage in core markets and the growing footprint of private credit. The fourth is fiscal. Interest payments as a share of GDP have risen across many countries, the report said, even as hedge funds with highly leveraged strategies have taken a larger role in intermediating government debt, creating what the BIS called a "novel fiscal-financial stability nexus."
The contagion channel
The January bulletin sharpened the point on contagion. "If a decline in AI investment were to come with a significant stock market correction, negative spillovers could be larger than previous booms suggest," the authors wrote, citing investor concentration in U.S. AI equities and hidden leverage in the financing chain. The bulletin's authors framed the build-out as a shift in funding model, writing that the size of anticipated investment needs "will require firms to shift the source of financing from operating cash flows to debt, with private credit playing a rapidly increasing role."
Caveats from Basel itself
No AI bull had publicly responded by press time, and the BIS dossier carries a single lean-bucket of center-tier official sources. The BIS itself supplied the main counterweight, noting that 2025 growth had "held up well" in part because of the same AI capex surge it is now warning about, and that the bulletin judged macroeconomic and financial stability risks from the boom to "appear moderate." The institution's call is for greater robustness, not retrenchment.
The report lands as central banks weigh how to respond to the Hormuz inflation pulse while equity markets remain near records. The BIS framed the choice for authorities as moving "from resilience to robustness," with the sustainability of the boom hinging on AI firms meeting high earnings expectations.