Behind the enthusiasm for Artificial Intelligence lies a fragile reality threatening the global financial system.
Technological euphoria acts as a cover, concealing accumulated rot and deep structural pathologies within the markets.
As the countdown has begun, this extreme illusion risks turning abruptly into a disastrous economic crash.
Specifically, according to economist Dambisa Moyo, present-day economic growth depends heavily on investments in Artificial Intelligence (AI) and fiscal spending.
The International Monetary Fund estimates that Artificial Intelligence could add up to half a percentage point to the annual growth rate of the global economy over the next decade, raising the average pace from 3% to 3.5%.
In the United States alone, Big Tech companies are projected to spend 650 billion dollars on Artificial Intelligence infrastructure in 2026, spanning the construction of data centers to hardware procurement.
According to JPMorgan, investments linked to Artificial Intelligence accounted for approximately one-fifth of real US GDP growth over the past year, contributing 0.5 percentage points.
However, signs indicate that an economic slowdown driven by Artificial Intelligence is imminent.
One need only examine the recent surge in interest rates, driven at least in part by shifts in capital flows.
Capital expenditures for Artificial Intelligence, previously funded through internal corporate reserves, are increasingly covered via debt and equity issuances.
Google, which historically ranked among prominent buyers of its own shares and commanded vast cash reserves, is now turning to financial markets to raise capital.
This surge in AI-related borrowing unfolds at a time when governments are struggling to manage mounting sovereign debt loads and persistent fiscal deficits, while simultaneously confronting rising spending demands for infrastructure and defense.
The consequence is ever-intensifying competition for capital, which drives bond yields upward and threatens to tip the global economy into recession.
Yields on ten-year and thirty-year US Treasuries are nearing levels not recorded since 2002.
Globally, approximately 84% of fixed-income securities now yield above 3%, compared to a mere 12% of equivalent securities in January 2022.
Pressures, however, are not confined to bond markets.
Several initial public offerings (IPOs) of Artificial Intelligence-related firms have been postponed this year, including those of SB Energy, Oura, and OpenAI.
SoftBank recently issued seven-year bonds at an interest rate of 9.75%, while Meta issued debt securities yielding 7.5%.
This indicates that investors are now demanding equity-like returns to finance investments in Artificial Intelligence.
An economic slowdown triggered by Artificial Intelligence would exert severe repercussions on the stock market.
The strong performance displayed by headline equity indexes already conceals a two-speed market, in which non-AI equities record subpar performances, whereas companies within the AI sector generate virtually all equity market gains.
Record rewards
As Moyo notes, if shares linked to Artificial Intelligence (AI) begin to retreat, wealthier consumers will likely curtail discretionary spending.
Declining equity valuations would also render venture capitalists more hesitant to fund startups across the AI space, forcing them to scale back expansion plans.
The outcome could be a vicious cycle of contracting investments and falling share prices across the entire sector.
Several factors could precipitate such a slowdown.
Disappointing productivity gains and poor returns on investment could compel corporations to revisit capital expenditure plans.
Infrastructure bottlenecks and cyberattacks could disrupt operational expansion.
Concurrently, intensifying NIMBY («not in my backyard») pushback, namely resistance to developing infrastructure proximate to residential areas, could generate political headwinds against data centers.
Any of these developments could halt the AI boom.
Global expenditure on Artificial Intelligence is projected to exceed 2.7 trillion dollars this year.
Although a slowdown could compress funding costs, the subsequent decline in interest rates would prove insufficient to shore up the wider economy.
Mortgage rates in the US, having climbed to nearly 7.5%, their highest mark since 2023, would have to decrease substantially before residential fixed investment rebounds.
For their part, central banks would retain constrained room to slash interest rates in response to an AI-induced recession.
With inflation persistently tracking above their 2% target, driven partly by conflicts in Ukraine and Iran, policymakers would hesitate to stimulate the economy out of concern over sacrificing institutional credibility.
Governments, already saddled with substantial fiscal deficits, would find it difficult to deploy additional fiscal stimulus to absorb an economic shock.
A substantial share of international capital currently flowing into the US is driven by return expectations tied to AI.
Should these returns fail to materialize, a portion of this capital could repatriate to origin countries, softening the dollar and pushing US Treasury yields higher.
This, in turn, would further complicate the financing of US government fiscal deficits.
The International Monetary Fund (IMF) has already identified signs of de-dollarization across official foreign exchange reserves, reflecting the receding primacy of the greenback, notably in international trade invoicing and cross-border lending.
In the fourth quarter of 2025, the dollar accounted for 56.8% of global foreign exchange reserves, down from roughly 72% registered at its peak in 2001.
Corporate executives must brace for an economic slowdown originating in AI.
At a minimum, companies ought to manage balance sheets prudently and preserve adequate liquid reserves as a defensive buffer.
On a more substantive level, they must evaluate the extent to which their recent financial performance has benefited from AI-related expenditures and expectations of future productivity acceleration, as well as how they would fare should this spending halt.
Those who assume the AI boom will endure indefinitely may soon confront an unpleasant surprise, concluded Moyo.
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