BIS warns AI spending surge poses systemic financial risk
In brief
- BIS warned AI exuberance poses financial stability risk due to debt-heavy financing structures.
- Hyperscalers plan $1 trillion AI capex in 2025-2026, outpacing earnings growth.
- AI asset price pullback could trigger wealth effects and consumption declines amid policy tightening.
- Semiconductor prices surging; Apple raised device prices up to 33% due to chip costs.
- BIS cautioned stablecoins risk fragmenting global monetary system and weakening sovereign control.
Debt-Fueled Expansion and Valuation Risk
Equity valuations are elevated, particularly for firms at the core of AI development, the BIS noted, and sustaining such high growth could become increasingly challenging. AI investment enthusiasm has surged with the recent SpaceX IPO and planned public offerings from Anthropic and OpenAI, fueling investor appetite for the sector.
The structural vulnerabilities run deeper than valuation alone. Nick Ruck, director of LVRG Research, told Cointelegraph that the BIS was right to flag the AI investment surge as a potential flashpoint for systemic risk. Ruck emphasized that "as financing has relied on enormous debt and highly leveraged nonbank structures that can rapidly unwind and amplify this cycle into a crisis."
Inflation and Policy Tightening
Persistent inflation rose to a three-year high of 4.2% in the US in May, adding urgency to the BIS's concerns. If central banks tighten policy to contain inflation, a sharp pullback in AI asset prices could trigger disruptive macro-financial feedback loops. A large correction in AI valuations could have more pronounced wealth effects and a sharper consumption pullback than in the past, given US market dominance.
Financial stability could be at risk in the event of an AI bust.
Chipflation and Supply Pressures
The AI boom is already rippling through hardware costs. Surging semiconductor and memory chip prices, driven by increasing AI data center demand outstripping supply, could compound inflation. This phenomenon, known as "chipflation," is causing prices for devices from smartphones to laptops to climb, according to Morgan Stanley analysts.
Apple announced price increases from 18% to nearly 33% on products including iPads, Macs, and home devices due to soaring memory and storage chip costs. BlackRock reported in March that surging semiconductor prices were posing upside risks to global goods inflation.
Despite these headwinds, the global economy displayed "surprising resilience" in 2025 despite successive shocks, partly driven by AI investments. The BIS also cautioned about stablecoins, which risk fragmenting the global monetary system and could weaken sovereign monetary control.
The central bank's warning underscores a growing consensus that AI's financial footprint has outpaced the risk management frameworks designed to contain it.
