BlockBeats report: On June 28, the Bank for International Settlements (BIS) issued a stern warning in its annual economic report released on Sunday, cautioning that the surge in AI spending by major tech companies could end in a prolonged "investment slump," potentially impacting financial markets and the global economy. The BIS noted that the world’s five largest cloud providers are projected to collectively invest over $1 trillion by the end of 2026. However, if returns in the tech sector fall short of expectations, investors may rapidly tighten financing, causing a sudden reversal from a capital expenditure boom to a long-term investment downturn. The report cites historical precedents—the canal building boom of the 1830s, the British railway mania of the 1840s, and the late 1990s internet bubble—all sharing a common trait: "genuine technological breakthroughs attracted capital far beyond what commercial returns could sustain," ultimately ending in investment reversals that triggered economic recessions.
Just as the BIS issued a warning, signs of market frenzy appeared densely:
Shortly after SpaceX's record-breaking $86 billion IPO, it launched a $25 billion bond offering; Allianz's chief investment officer this week pointed to this as a sign that markets have entered a "bubble zone."
Tech companies are issuing massive amounts of debt in global credit markets, taking advantage of credit spreads near century-low levels, channeling tens of billions of dollars into AI projects.
The BIS further noted that, unlike in previous cycles, households currently have a higher exposure to equities relative to their wealth and income; a significant correction in AI-related stock markets could therefore have a more severe impact on the real economy. Meanwhile, AI companies’ substantial bond issuance to raise capital may also threaten financial stability. In addition, ongoing energy disruptions caused by the near-closure of the Strait of Hormuz continue to push inflation higher, placing global central banks under mounting pressure from persistent inflation, the sustainability of AI investments, worsening financial vulnerabilities, and deteriorating fiscal conditions.