Ratings agency Fitch identified an artificial intelligence market correction as an emerging major global credit risk in its third-quarter outlook, joining other international watchdogs expressing concern about the trajectory of technology valuations and capital spending in the sector.
Fitch noted that artificial intelligence investment has become deeply interwoven with economic growth and capital markets, particularly in the United States, creating significant exposure to potential major selloffs. The agency highlighted that the U.S. S&P 500’s cyclically adjusted price-to-earnings ratio had climbed to levels reminiscent of the late-1990s dotcom period. Corporate bond issuance surged 26% in the first half of 2026, largely driven by artificial intelligence-related fundraising, with six major technology and aerospace companies issuing $182 billion in investment-grade bonds. Capital expenditure by four major technology firms was projected to exceed $700 billion this year, representing growth exceeding 75%.
Fitch estimated that information technology investment directly contributed 1.4 percentage points to first-quarter U.S. gross domestic product growth. However, the agency cautioned that uncertainty surrounding future artificial intelligence revenues, regulatory developments, competitive pressures, and labor market impacts could trigger a substantial and extended market correction with broad macroeconomic consequences.
Beyond artificial intelligence concerns, Fitch identified geopolitical tensions involving the United States and Iran as a second major risk factor, particularly following renewed fighting and closure of the Strait of Hormuz. The agency projected global growth would slow to 2.4% in 2026 and forecast U.S. inflation would end the year at 3.7%, reflecting elevated energy prices.
Additionally, Fitch flagged a strong El Niño weather pattern as an emerging credit risk, warning that resulting droughts, floods, and severe storms could compound inflationary pressures from geopolitical developments. The agency noted that highly indebted nations with lower credit ratings would face particular vulnerability, especially in Latin America where agricultural input costs and supply chains depend significantly on Middle Eastern sources.
Article Attribution | Read More at Article Source
Article summary produced by Claude AI