The Bank for International Settlements, the institution that serves as a coordination hub for the world’s central banks, is sounding the alarm on what it sees as growing fragility underneath the AI-fueled market rally. Frank Smets, head of economic analysis at BIS, flagged increasing signs that the two-year run of AI-driven equity gains may be running on borrowed time, and in some cases, borrowed money.
The warning centers on a familiar cocktail of ingredients: rising leverage among major US tech firms, opaque financing structures, and investor expectations that may have outpaced reality.
A trillion dollars of conviction
The top five hyperscalers, a group that includes Alphabet, Amazon, Meta, Microsoft, and Oracle, are projected to pour more than $1 trillion into AI-related capital expenditures across 2025 and 2026 combined.
The BIS’s annual economic report, released in late June 2026, drew explicit comparisons between the current AI investment surge and prior speculative episodes: canal mania, railway expansions, the electrification boom, and the dotcom bubble. Each of those episodes featured genuine technological breakthroughs. Each also featured a period where capital flooded in faster than returns could justify.
