BIS Chief Flags AI Investment Risks Amid Trillion-Dollar Spending

BIS General Manager Flags AI Investment Risks

Pablo Hernández de Cos, General Manager of the Bank for International Settlements (BIS), warned that the current surge in capital expenditure on artificial intelligence (AI) could face a significant downturn if expected returns do not materialise.

Speaking at the Global Fintech Fest 2026 in Mumbai, Mr Hernández de Cos pointed to increasing debt levels and complex financing structures as key threats to financial stability. He noted that the five largest technology companies are projected to invest over US$1 trillion in AI during 2025 and 2026 alone. This substantial spending shows the scale of the potential risk.

Debt and Opaque Financing Raise Concerns

The BIS general manager expressed particular concern over the growing reliance on external financing, as capital expenditure by major corporations now frequently surpasses their available cash flows. He detailed "circular financing" arrangements, where technology suppliers acquire stakes in AI companies that then commit to purchasing their chips and computing services.

These intricate financial connections between chipmakers, cloud providers, and AI firms are challenging to monitor and value, adding layers of opacity to the market. Intense competition also drives companies to invest beyond what future profits might justify.

Global AI Investment Set to Surge

Global investment in AI is anticipated to expand dramatically, from approximately US$500 billion in 2026 to an estimated US$3 trillion to US$4 trillion by 2030, according to industry participants.

Mr Hernández de Cos also outlined broader risks, including increased cybersecurity threats for financial institutions, as AI tools enhance capabilities for both attackers and defenders.

Furthermore, the technology could complicate central banks' efforts to assess economic conditions by simultaneously influencing economic activity, inflation, and interest rates, demanding more flexible policymaking and international cooperation.

Asia's Exposure to AI Investment Volatility

A potential market correction in AI investments could significantly affect household spending, particularly in economies where consumers hold substantial wealth in equities. Given the large proportion of global equity markets represented by US stocks, such an impact could spread internationally, including to Asian markets.

Asian technology firms, especially those integrated into global supply chains for chips and cloud services, would face direct exposure to any downturn in AI capital expenditure. Financial institutions across Asia, particularly those with exposure to private credit funding tech ventures, should review their risk assessments for these evolving investment structures.