Fitch warns AI correction threatens $700 billion tech capex boom

Fitch Ratings warns an AI market correction now ranks among the biggest threats to global credit as tech valuations near dotcom-era extremes.

Fitch Ratings warned Tuesday that the artificial-intelligence boom has created a major vulnerability for global credit markets, with tech valuations approaching dotcom-era levels and corporate bond issuance surging 26% in the first half of 2026.

"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 in its third-quarter Global Risk Outlook.

The S&P 500's cyclically adjusted price-to-earnings ratio has climbed to levels last seen during the late-1990s dotcom bubble, the ratings agency said. Amazon, Alphabet, Nvidia, Meta, Oracle and SpaceX together issued $182 billion of investment-grade bonds in the first six months of 2026, while capital expenditure by Alphabet, Amazon, Meta and Microsoft is projected to jump more than 75% this year to $700 billion. Fitch estimated that booming IT investment directly added 1.4 percentage points to first-quarter US gross domestic product growth.

The warning shows how deeply the AI boom has become intertwined with economic growth and capital markets, particularly in the United States, raising the stakes of any major selloff. Fitch said uncertainty over future AI revenues, regulation, competition and labor-market disruption could trigger a prolonged correction with widespread macroeconomic implications. The agency expects world economic growth to slow to 2.4% in 2026 and forecasts US inflation will end the year at 3.7%, reflecting the impact of higher energy prices tied to renewed US-Iran tensions and the closure of the Strait of Hormuz.

Valuations Flash Dotcom-Era Warning Signs

The cyclically adjusted price-to-earnings ratio for the S&P 500 has risen to levels comparable to the late 1990s, when the technology-heavy Nasdaq Composite lost nearly 80% of its value from its March 2000 peak to its October 2002 trough. The last time valuations reached such extremes, the subsequent correction erased more than $5 trillion in market capitalization across US equities, according to data from the Federal Reserve. Fitch's warning echoes recent alerts from global financial watchdogs that the AI investment cycle has become increasingly correlated with broader economic performance.

Bond Markets Fuel the AI Spending Machine

US corporate bond issuance surged 26% in the first half of 2026, driven largely by AI-related fundraising. The six companies — Amazon, Alphabet, Nvidia, Meta, Oracle and SpaceX — raised $182 billion through investment-grade debt, much of it earmarked for data-center construction, chip procurement and AI research. The combined capital expenditure of Alphabet, Amazon, Meta and Microsoft is on track to reach $700 billion this year, a 75% increase from 2025. That spending has directly supported US GDP growth, but it also creates a concentration risk: if AI revenue fails to materialize as expected, the debt-servicing capacity of these companies could come under pressure, Fitch said.

For investors, the Fitch warning adds a formal credit-risk dimension to what has largely been an equity-market debate about AI valuations. Credit-default swap spreads on Nvidia debt have already widened in recent weeks as reports of deal scrutiny and competitive pressure from China emerged, according to Bloomberg data. If the ratings agency's scenario plays out, the transmission chain would run from equity selloffs to wider credit spreads to tighter financial conditions — a cycle that could slow the very economic growth the AI boom has helped drive.

This article is for informational purposes only and does not constitute investment advice.