AI has emerged as a major force in global markets, with companies connected to AI now accounting for roughly 44% of the S&P 500’s market capitalisation. Their rapidly increasing valuations have driven US stock indices to levels approaching those seen during the dot-com bubble. Despite strong optimism, the future carries significant uncertainty. The infrastructure required for AI is enormous, with projections indicating that trillions of dollars will be necessary to construct and operate new data centres by 2030. Much of this funding is likely to come from debt, raising the risk of greater vulnerability to market shocks.

Experts caution that any slowdown in AI development or its ability to generate revenue could lead to steep declines in prices of AI-related assets. The Bank of England has highlighted that risks to financial stability may increase if the expansion of AI infrastructure continues at the current rate. Financial institutions such as banks and private credit funds might encounter rising exposure to highly leveraged industries, while energy and commodity markets could experience pressure due to the surging power demands of AI. Although AI remains a significant engine of growth for the US economy, its swift growth is introducing new systemic risks. Policymakers and financial regulators are advised to keep a close watch on the sector as the next stage of AI-driven growth emerges.