Fitch has placed the AI boom and the chance of a market correction among the two dominant short-term risks in its third-quarter Global Risk Outlook. The ratings agency points to an S&P 500 cyclically adjusted price-to-earnings ratio near late-1990s dotcom levels and a 26% jump in U.S. corporate bond issuance. Renewed U.S.-Iran fighting sits alongside it as the other major concern.
Ratings agency Fitch has named the AI boom and the risk of a correction as emerging major global credit risks, joining a widening set of warnings that tech valuations and AI spending may have outrun returns that remain uncertain. It is the bluntest such warning yet from a major ratings firm.
In its third-quarter Global Risk Outlook, the agency said two short-term risks now dominate the credit backdrop: growing vulnerability to an AI-related correction and continued uncertainty tied to the U.S.-Iran conflict. Fitch 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.
Valuations sit close to dotcom-boom levels
The report flagged that the U.S. S&P 500’s cyclically adjusted price-to-earnings ratio has climbed close to levels last seen during the late-1990s dotcom boom. Over the same stretch, U.S. corporate bond issuance surged 26% in the first half of 2026, driven largely by AI-related fundraising. The warning landed as Asia’s AI-linked stocks tanked again on Tuesday amid questions over who pays for the spending boom and evidence of growing competition from China.
Big Tech borrowing and capex feed the exposure
Amazon, Alphabet, Nvidia, Meta, Oracle and SpaceX together issued $182 billion of investment-grade bonds, Fitch said. Capital expenditure by Alphabet, Amazon, Meta and Microsoft is projected to jump more than 75% this year to $700 billion. The agency also estimated that booming IT investment directly added 1.4 percentage points to Q1 U.S. GDP growth, while rising equity prices have helped support household spending through a wealth effect.
Because of that entanglement, Fitch argued, uncertainty over future AI revenues, regulation, competition and labour-market disruption could trigger a potentially significant and prolonged market correction with widespread macroeconomic implications. Fitch said capital markets and economies have become intertwined with AI in a way that “created a vulnerability for credit”.
War and El Niño round out the list
Geopolitical risk remains the other major concern, especially after 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 — a phenomenon the agency warned could compound the inflationary pressures linked to the U.S.-Iran conflict. Highly indebted, “junk”-rated countries would be particularly vulnerable, Fitch added, as food-price spikes could complicate monetary policy, increase subsidy costs and further strain public finances.
Source: Reuters
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