The hidden costs of this boom are beginning to show up in both corporate financial statements and consumer prices, according to the Delfi.lv portal, citing Euronews.
Theshock could spread from the markets to the economy
In its annual economic report published on Sunday, the Bank for International Settlements (BIS), known as the “central bank for central banks,” warned that massive spending on AI is creating financial vulnerabilities that could amplify any future shock and spread from the markets to the broader economy.
Presenting the report’s findings, BIS General Manager Pablo Hernández de Cos stated that the main message is the “urgency” of the situation: policymakers should act before a potential reversal makes the subsequent correction even more painful.
The warning is based on the scale of spending, even though massive investments over the past year have supported global economic growth.
The five largest tech giants, which are competing to build AI infrastructure, plan to allocate more than $1 trillion (€878 billion) to AI-related investments in 2025 and 2026.
This pace outstrips their revenues and free cash flow, forcing some companies to aggressively increase borrowing to keep up.
The BIS believes that this race is fueled by the conviction that, in the end, only a few dominant players will prevail, which is driving companies to invest in projects whose future returns remain highly uncertain.
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