BIS warns: AI boom could put markets under pressure

The race to invest in artificial intelligence has become one of the main pressure points identified by the Bank for International Settlements. In its Annual Economic Report 2026, the central banks’ bank draws attention to the sustainability of the AI boom and its possible effects on markets, interest rates and financial stability.

The report does not question the technology’s economic importance. Investment in the artificial intelligence ecosystem has supported growth, markets and global supply chains. The risk arises when spending on chips, data centers, energy, servers and software increases faster than revenue and margins.

Spending must produce results

The issue mainly concerns so-called AI capex, meaning the investment needed to build technological infrastructure. Large companies must commit considerable resources before they achieve stable returns. Competition for leadership can also encourage overinvestment, while the market continues to reward growth expectations.

Demand for infrastructure remains strong for Nvidia, Broadcom, Micron, AMD, TSMC and SK Hynix. Valuations, however, already reflect high expectations. Even a normal slowdown could therefore be interpreted by investors as a disappointment.

A similar situation affects large cloud and software groups, including Microsoft, Alphabet, Amazon and Meta. These companies have stronger balance sheets than many speculative businesses, but they must show that AI spending translates into higher profits.

The risk may also affect technology ETFs. Funds that track the Nasdaq 100 or invest in semiconductors and artificial intelligence offer formal diversification, but they may remain concentrated in the same factors. These include chip demand, cloud services, US interest rates and the dollar.

The most favorable scenario involves growth in real demand, with rising cloud revenue and margins capable of supporting investment. In a more selective scenario, AI remains an important industrial theme, but the market mainly rewards companies with paying customers and verifiable results. The most problematic case arises if returns arrive more slowly than expected. In that case, companies could reduce spending, while credit conditions and valuations would become less favorable.

For investors, the BIS warning is not a call to sell the entire sector. It instead calls for an assessment of the technology’s weight in the portfolio, the price paid and the investment horizon. A 20–30 percent correction should be compatible with the investor’s objectives. If it were not, the problem would concern portfolio concentration, not the existence of the technology.