Fitch warns AI market correction emerging as major global credit risk

The AI boom and the risk ⁠of ⁠a correction are emerging as major global ⁠credit risks, ratings agency Fitch has warned, adding to growing concerns that soaring tech valuations and ​unprecedented AI spending may be running ahead of uncertain future returns.

In its third-quarter Global Risk Outlook, Fitch said 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.

The ratings agency echoed recent warnings from global watchdogs that the ⁠AI boom has ⁠become increasingly intertwined with economic growth and with capital markets, particularly in the United States, ​raising the risks of any major selloff.

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

The warning, which is the bluntest so far from any major ratings firm, came as ​Asia’s AI-linked stocks tanked again on Tuesday amid the worries about who’s paying for the spending boom and evidence ⁠of growing ⁠competition from China.

Fitch’s report highlighted ⁠that 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.

Amazon, Alphabet, Nvidia, Meta, Oracle and SpaceX together issued $182 billion of investment-grade bonds, while capital expenditure by Alphabet, Amazon, Meta and Microsoft is projected to jump more than 75% this year to $700 billion, Fitch said.

It 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.

However, uncertainty over future AI revenues, regulation, competition and labour-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 have created a vulnerability for credit,” Fitch said.

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.

It also flagged a strong El Niño weather pattern as an emerging credit risk, given the likelihood of droughts, floods and severe storms.

The ratings agency warned the phenomenon could compound the ⁠inflationary pressures linked to the U.S.-Iran conflict.

Highly indebted, “junk”-rated countries would be particularly vulnerable, it added as food-price spikes could complicate monetary policy, increase subsidy costs and further strain public finances.

In Latin America, where fertiliser and diesel account for between 50% and 70% of agricultural input costs and around 30% of fertiliser supplies come from the Middle East, higher ​costs and weaker harvests could squeeze agribusiness margins and hit transport sectors including ports, railways and toll ​roads, Fitch said.