AI bubble overtakes geopolitics as top concern for credit investors, BofA survey finds
The survey showed that only 10 per cent of credit investors consider AI-driven corporate obsolescence a big concern
The risk of an artificial intelligence bubble has, for the first time, become the top concern among credit investors, overshadowing geopolitical worries, according to a Bank of America (BofA) survey.
In a February survey of investment-grade clients who buy and sell debt, 23 per cent said the threat of an AI bubble was now their top concern, up from 9 per cent in December, according to BofA strategists Barnaby Martin and Ioannis Angelakis and analyst Mohit Agarwalla.
“[An] AI bubble is now seen as the No 1 investor risk for the first time ever,” they said in a survey report issued on Tuesday.
In a weighted average of polled expectations, the investors said hyperscalers – mega-cap cloud and data centre operators such as Amazon and Meta Platforms – would issue about US$285 billion in new debt to fund their AI expansions this year, a 36 per cent increase from the US$210 billion estimated two months prior.
Almost 30 per cent of the February respondents gave an estimate of US$300 billion or higher for the figure, up from 6 per cent in December.
Worries over excessive AI investments and valuations have overtaken concerns about credit markets being overpriced and geopolitics, the survey showed.
