The AI boom and the risk of a correction are emerging as major global credit risks, ratings agency Fitch has warned, adding to growing concerns that soaring tech valuations and unprecedented AI spending may be running ahead of uncertain future returns.
In its third-quarter Global Risk Outlook, Fitch said the credit backdrop remains dominated by two short-term risks: mounting vulnerability to an AI-related market correction and continued uncertainty linked to the U.S.-Iran conflict.
The ratings agency echoed recent warnings from global watchdogs that the AI boom has become increasingly intertwined with economic growth and with capital markets, particularly in the United States, raising the risks of any major selloff.
"The scale of AI investment is such that the exposure of the economy and overall capital market to such a correction is significant," Fitch said.
VALUATIONS CLOSE TO DOTCOM BOOM
The warning, which is the bluntest so far from any major ratings firm, came as Asia's AI-linked stocks tanked again on Tuesday amid the worries about who's paying for the spending boom and evidence of growing competition from China.
Fitch's report highlighted that the U.S. S&P 500's cyclically adjusted price-to-earnings ratio has climbed to levels close to those seen during the late-1990s dotcom boom, while U.S. corporate bond issuance surged 26% in the first half of 2026, driven largely by AI-related fundraising.
Amazon, Alphabet, Nvidia, Meta, Oracle and SpaceX together issued $182 billion of investment-grade bonds, while capital expenditure by Alphabet, Amazon, Meta and Microsoft is projected to jump more than 75% this year to $700 billion, Fitch said.
It estimated that booming IT investment directly added 1.4 percentage points to first-quarter U.S. GDP growth, while rising equity prices have also helped support household spending through a wealth effect.
However, uncertainty over future AI revenues, regulation, competition and labour-market disruption could trigger a potentially significant and prolonged market correction, with widespread macroeconomic implications.
"The extent to which capital markets and economies have become intertwined with AI have created a vulnerability for credit," Fitch said.
WAR AND EL NIÑO
Geopolitical risk remains the other major concern, especially with renewed fighting between the U.S. and Iran in recent weeks and a fresh closure of the Strait of Hormuz.
Fitch expects world growth to slow to 2.4% in 2026 and forecasts U.S. inflation will end the year at 3.7%, reflecting the impact of higher energy prices.
It also flagged a strong El Niño weather pattern as an emerging credit risk, given the likelihood of droughts, floods and severe storms.
The ratings agency warned the phenomenon could compound the inflationary pressures linked to the U.S.-Iran conflict.
Highly indebted, "junk"-rated countries would be particularly vulnerable, it added as food-price spikes could complicate monetary policy, increase subsidy costs and further strain public finances.
In Latin America, where fertiliser and diesel account for between 50% and 70% of agricultural input costs and around 30% of fertiliser supplies come from the Middle East, higher costs and weaker harvests could squeeze agribusiness margins and hit transport sectors including ports, railways and toll roads, Fitch said.
