Fitch Ratings has placed the surge in artificial intelligence investment and the potential for a related market correction among the foremost credit risks facing the global economy, according to the ratings agency's third-quarter Global Risk Outlook.
The report identifies two short-term themes shaping the credit backdrop - growing exposure to a possible AI-linked market selloff and continuing uncertainty stemming from the U.S.-Iran conflict. Fitch cautioned that the scale of AI spending and its integration into capital markets and economic growth raise the consequences of any major downturn in technology valuations.
Fitch highlighted that the U.S. S&P 500's cyclically adjusted price-to-earnings ratio has risen to levels approaching those seen in the late-1990s dotcom era. Corporate bond issuance in the United States expanded rapidly in the first half of 2026, up 26%, with much of that issuance tied to AI-related fundraising.
Specifically, Fitch noted that Amazon, Alphabet, Nvidia, Meta, Oracle and SpaceX collectively issued $182 billion of investment-grade bonds. At the same time, projected capital expenditure by Alphabet, Amazon, Meta and Microsoft is expected to increase by more than 75% this year, bringing total projected IT-related capex to about $700 billion, the report said.
Those funding and spending dynamics have had measurable macroeconomic effects. Fitch estimated that booming IT investment directly contributed 1.4 percentage points to U.S. GDP growth in the first quarter, and that rising equity prices have supported household spending through a wealth effect. Yet the agency underscored the uncertain nature of future AI revenues and outcomes, along with regulatory, competitive and labour-market risks that could precipitate a significant and sustained market correction with broad macroeconomic consequences.
"The extent to which capital markets and economies have become intertwined with AI have created a vulnerability for credit," Fitch wrote in its outlook.
Geopolitical and climate risks
Alongside AI, Fitch called out geopolitical risk as the other major near-term concern. The agency pointed to renewed fighting between the United States and Iran in recent weeks and noted a fresh closure of the Strait of Hormuz as amplifying uncertainty. Higher energy prices tied to such developments are incorporated into Fitch's outlook, and the agency now expects global growth to slow to 2.4% in 2026.
Fitch also forecast that U.S. inflation will end 2026 at roughly 3.7%, reflecting the impact of elevated energy costs. The ratings agency further identified a strong El Nino weather pattern as an emerging credit risk that could trigger droughts, floods and severe storms, thereby compounding inflationary pressures linked to geopolitical tensions.
Fitch warned that these overlapping shocks would be particularly damaging to highly indebted, lower-rated sovereigns. Food-price spikes driven by extreme weather or higher input costs could complicate monetary policy choices, increase subsidy burdens and further strain public finances.
In Latin America, Fitch pointed to the sectoral transmission channels that could amplify stress: fertiliser and diesel account for between 50% and 70% of agricultural input costs in parts of the region, and roughly 30% of fertiliser supplies originate in the Middle East. Higher input costs and reduced harvests could erode agribusiness margins and create knock-on pressure on transport sectors including ports, railways and toll roads, the report said.
Implications for markets and policy
Fitch's outlook portrays a credit environment where concentrated corporate spending on AI has increased both market exposure and the potential for a sharp adjustment. Coupled with geopolitics and climate-driven supply shocks, the ratings agency warned of heightened downside risks to growth, inflation and fiscal balances, particularly in vulnerable economies and sectors dependent on energy and agricultural inputs.
The agency's assessment ties together stretched tech valuations, accelerated corporate borrowing for AI initiatives, and the macroeconomic effects of elevated equity prices, while stressing that uncertainties about the commercial returns to AI investments leave considerable downside risk for credit markets.
Fitch's report serves as a reminder that rapidly evolving investment cycles in technology, when combined with geopolitical and climatic shocks, can produce complex credit challenges across both advanced and emerging market economies.