BIS Warns AI Boom Is Becoming a Financial-Stability Risk as Tech Private Credit Passes $1 Trillion

The Bank for International Settlements has warned that the AI investment boom is showing “growing signs of vulnerability” as technology-sector borrowing through private credit has surged from about $22 billion in 2010 to more than $1 trillion.

The concern is shifting beyond expensive technology shares.

Debt is entering the equation.

Technology accounted for about 22% of private-credit borrowing in 2010. By 2025, that share had risen to roughly 44%, according to figures reported by Reuters.

Across financing channels, outstanding technology-sector loans are now approaching $2.5 trillion.

Much of that capital is feeding an extraordinary expansion in AI infrastructure.

Data centres, chips, power generation and computing capacity require enormous upfront investment. The economic case rests heavily on future AI revenues and productivity gains being sufficient to justify today’s spending.

The BIS is not predicting that this is about to collapse.

Frank Smets, head of economic analysis at the institution, said there are currently no broad signs of financial-market stress.

The warning concerns what is being built underneath the boom.

Smets highlighted financing structures that can be opaque, off balance sheet and, in some cases, circular.

Private credit adds another complication.

Unlike conventional bank lending or publicly traded bonds, parts of the market are considerably less transparent, making concentrations of risk and interconnected exposures harder to see from outside.

That matters if the assumptions underpinning AI investment eventually prove too optimistic.

A conventional technology-stock correction can destroy enormous amounts of paper wealth without necessarily threatening the wider financial system.

Debt behaves differently.

Loans still have to be serviced when valuations fall.

AI companies and infrastructure providers are committing capital today against expectations of future demand that remain exceptionally large and, in many cases, unproven.

If those expectations are broadly correct, the infrastructure may generate the cash flows required to support the borrowing behind it.

If they are wrong, losses need not remain confined to technology shareholders.

The transformation in private credit captures how quickly the financial architecture around the AI boom has changed:

2010: about $22 billion.

2025: more than $1 trillion.

AI has already produced a stock-market boom.

It is increasingly producing a credit boom alongside it.

Sources

• Reuters – BIS warns AI-market momentum is showing vulnerability
• Bank for International Settlements – Progress and peril: financial conditions amid the AI boom