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BIS chief warns debt-financed AI spending could spark systemic risk
Bank for International Settlements chief Pablo Hernandez said five largest tech firms plan to spend more than $1 trillion on AI projects in 2025 and 2026, even as AI capital spending outpaces cash flows.
Bank for International Settlements chief Pablo Hernandez warned that debt-financed artificial intelligence investment could create financial stability risks if returns fall short of expectations, even as he stopped short of calling a specific AI bubble, according to CoinDesk.
Hernandez said the five largest technology companies are set to spend more than $1 trillion on AI projects in 2025 and 2026, while global AI investment could rise to between $3 trillion and $4 trillion by 2030, with expectations that investment continues to expand.
He cautioned that AI capital spending is increasingly outpacing cash flows and being financed through debt and private credit, as firms compete in a kind of AI arms race, with financing links that can be opaque and hard to value.
Hernandez drew historical comparisons to canal mania, railway mania, electrification booms, and the dot-com surge, saying corrections in concentrated growth periods had economy-wide implications, and that a reversal in concentrated AI stocks could affect household spending and spread beyond the United States.