Fitch, a ratings agency, has warned that the AI boom and the risk of a correction are emerging as major global credit risks. The agency stated that 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.

AI Investment and Economic Growth

The scale of AI investment is such that the exposure of the economy and overall capital market to such a correction is significant. 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.

Major companies such as Amazon, Alphabet, Nvidia, Meta, Oracle, and SpaceX have issued significant amounts of investment-grade bonds, with capital expenditure by Alphabet, Amazon, Meta, and Microsoft projected to jump more than 75% this year to $700 billion. Fitch 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.

Uncertainty and Market Correction

However, uncertainty over future AI revenues, regulation, competition, and labor-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 has created a vulnerability for credit.

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.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.