Fitch Warns AI Market Correction as Major Global Credit Risk

The AI boom and the risk of a correction are emerging as major global credit risks, according to Fitch. In its third-quarter Global Risk Outlook, the agency highlighted the vulnerability to an AI-related market correction, noting that "the scale of AI investment has significantly increased the exposure of the economy and capital markets to such a correction." The report pointed to the U.S. S&P 500's cyclically adjusted P/E ratio approaching levels seen during the late-1990s dotcom boom, while U.S. corporate bond issuance surged 26% in the first half of 2026, largely driven by AI-related fundraising. Amazon, Alphabet, Nvidia, Meta, Oracle, and SpaceX collectively issued $182 billion in investment-grade bonds, with Alphabet, Amazon, Meta, and Microsoft projected to spend $700 billion on capital expenditure this year. Fitch estimated that booming IT investment added 1.4 percentage points to U.S. GDP growth in Q1. However, uncertainties over future AI revenues, regulation, competition, and labor market disruption could trigger a significant and prolonged market correction with widespread macroeconomic implications. Geopolitical risks remain a major concern, particularly with ongoing U.S.-Iran tensions and the Strait of Hormuz closure. Fitch forecasts global growth to slow to 2.4% in 2026 and U.S. inflation to end the year at 3.7%.

The interdependence of AI spending with economies and markets poses a significant threat to financial stability. This situation demands careful risk management from investors while compelling companies to reassess their capital allocation strategies.