The current investment boom around artificial intelligence may slow sharply if the expected return from the technology turns out to be lower than forecasts, the Bank for International Settlements (BIS) warns in its new annual economic report.
According to Experts Club, optimism around AI has become one of the factors that supported the global economy and financial markets in recent months. Investments in semiconductors, data centers and energy infrastructure have grown, while large technology companies have become one of the main drivers of capital expenditures.
However, it is precisely the scale and speed of this process that create new risks. BIS compares the current AI boom with previous technological investment cycles — the construction of canals in the 1830s, the railway boom in Great Britain in the 1840s, electrification in the late 1920s and the dot-com boom of the late 1990s.
The common feature of these periods was that a real technological breakthrough attracted more capital than commercial returns could justify. As a result, such booms ended with a reversal of investment and a downturn that affected not only individual companies but also the economy as a whole.
According to BIS, the five largest hyperscalers — major providers of cloud and computing capacity — may spend more than $1 trillion on AI-related capital investments in 2025-2026. These commitments are already outpacing companies’ profits and free cash flow, which is why part of the financing is being raised through debt markets.
BIS General Manager Pablo Hernández de Cos, quoted by The Wall Street Journal, said that competition for future market share may have led to excessive investment in AI. If the technology does not deliver the expected return, the sector may prove vulnerable, and the current investment boom may abruptly come to an end.
BIS is particularly concerned not only about the volume of investments itself, but also about how they are financed. This concerns the debt of hyperscalers, AI laboratories, equipment suppliers, construction and engineering contractors involved in creating data centers, energy capacity and other infrastructure.
If the largest customers slow down or stop capital expenditures, companies in the supply chain may face a sharp drop in revenue and difficulties servicing debt. This may increase pressure on fixed-income markets, corporate bonds and private credit.
BIS emphasizes that this is not about denying the long-term potential of artificial intelligence. On the contrary, AI may increase productivity in the economy, but the transition to this model is accompanied by uncertainty: it is still unclear how quickly companies will be able to introduce the technology into real production processes and monetize it on a scale sufficient to justify current investments.
Another risk is related to infrastructure constraints. The development of AI is already facing shortages of electricity, network equipment, powerful semiconductors and opportunities for rapid construction of data centers. These constraints may increase the cost of projects and at the same time intensify overinvestment if companies seek to secure capacity in advance through long-term contracts.
For the financial system, the key threat is that possible disappointment in the return from AI may coincide with already existing vulnerabilities — high valuations of technology company stocks, rising debt, activity in the non-bank financial sector and increased market sensitivity to changes in interest rate expectations.
In this scenario, the AI boom may turn from a source of growth into a factor of financial instability. First, there may be a decline in capital investment and a fall in orders in the infrastructure chain, then a deterioration in the position of borrowers, a widening of credit spreads and a revaluation of AI-related assets.
For businesses and investors, the main conclusion of BIS is that technological progress does not cancel financial discipline. Even if artificial intelligence really becomes one of the key technologies of the coming decade, this does not guarantee that all current investments will pay off, or that all companies participating in the race will remain resilient.
BIS, or the Bank for International Settlements, is an international financial organization headquartered in Basel, Switzerland. The bank was established in 1930 and is considered one of the oldest international financial institutions. Its main task today is to promote global monetary and financial stability through cooperation among central banks, research, statistics, analytical reports and support for international financial standards. BIS is often called the “bank for central banks” because it works primarily with central banks and international financial organizations.
