In a speech delivered at the Global Fintech Fest 2026 in Mumbai, India, de Cos said this boom has seen equity valuations become elevated and concentrated among a small number of firms, the largest firms become increasingly reliant on debt as their expenditure outpaces their cash flows and so-called circular financing become more prevalent as chip manufacturers, hyperscalers and AI firms become linked in ways that are difficult to observe.
“The concern is straightforward,” de Cos said. “Should the returns to AI disappoint, a pullback in investment could turn today’s capital expenditure boom into a bust.”
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Like previous investment booms around canals in the 1830s, British railways in the 1840s, electrification in the 1920s and the dotcom industry in the 1990s, there is a risk that the AI investment boom could see firms draw in more capital than the eventual returns could justify, leading to a correction that impacts the entire economy, de Cos said.
Because households now hold more wealth in equities, such a correction could have greater consequences for consumption. And, because U.S. stocks account for a large share of global equity markets, the effects could spread around the world, de Cos said.
“I do not say that this is where the AI boom must lead. But the scale and speed of the current investment boom, and the weight of expected commercial returns, do warrant some caution,” de Cos said.
A BIS report released in July found that excessive AI investment could make the technology’s boom unsustainable.
Phurichai Rungcharoenkitkul, principal economist at BIS, wrote in the report: “The AI build-out ranks among the largest technology-driven investment booms in U.S. history. Its scale, reliance on debt and circular equity ties raise questions about the boom’s sustainability and financial stability.”
It was reported in May that record spending on AI by America’s tech giants had eaten into their cash flow. With Big Tech investing $725 billion in AI projects, the combined free cash flow of Amazon, Google, Microsoft and Meta was projected to fall by $4 billion during the third quarter.
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