Fitch Ratings Identifies AI Market Correction as Emerging Major Global Credit Risk

In its third-quarter Global Risk Outlook, Fitch Ratings warns that the artificial intelligence boom and the risk of a market correction are emerging as major global credit risks. Tech valuations approach dotcom-era levels, with capital expenditure by Alphabet, Amazon, Meta, and Microsoft projected to jump over 75% to $700 billion in 2026. Fitch also highlights geopolitical tensions from the U.S.-Iran conflict, a fresh closure of the Strait of Hormuz, and El Niño weather patterns as key near-term threats.

AI market correction risk

• ▪Fitch Ratings warned in its third-quarter Global Risk Outlook that the artificial intelligence boom and the risk of a market correction are emerging as major global credit risks
• ▪Fitch Ratings stated that the scale of artificial intelligence investment has created a significant vulnerability for credit, capital markets, and the overall economy
• ▪Fitch Ratings estimated that booming information technology investment directly added 1.4 percentage points to first-quarter U.S. gross domestic product growth in 2026

Corporate AI capital expenditure

• ▪Fitch Ratings reported that U.S. corporate bond issuance surged 26% in the first half of 2026, driven largely by artificial intelligence-related fundraising
• ▪Amazon, Alphabet, Nvidia, Meta, Oracle, and SpaceX together issued $182 billion of investment-grade bonds in the first half of 2026
• ▪Fitch Ratings projected that capital expenditure by Alphabet, Amazon, Meta, and Microsoft will jump more than 75% in 2026 to $700 billion

Strait of Hormuz closure

• ▪Fitch Ratings identified continued uncertainty linked to the U.S.-Iran conflict and a fresh closure of the Strait of Hormuz as a major short-term global credit risk
• ▪Fitch Ratings forecasted that global economic growth will slow to 2.4% in 2026, while U.S. inflation will end the year at 3.7% due to higher energy prices

El Niño agricultural pressures

• ▪Fitch Ratings reported that higher costs and weaker harvests in Latin America could squeeze agribusiness margins and hit transport sectors, where fertilizer and diesel account for 50% to 70% of agricultural input costs
• ▪Fitch Ratings flagged a strong El Niño weather pattern as an emerging credit risk that could compound inflationary pressures and strain public finances in highly indebted, junk-rated countries

Tech stock valuation levels

• ▪Fitch Ratings highlighted that the U.S. S&P 500's cyclically adjusted price-to-earnings ratio has climbed to levels close to those seen during the late-1990s dotcom boom
• ▪Asia's artificial intelligence-linked stocks declined on July 28, 2026, amid worries about spending returns and growing competition from China