Media365
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.
“AI bubble is now seen as the number one investor risk for the first time ever,” they said in a survey report issued on Tuesday.
Investors expected that 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 expansion, a 36 per cent increase from the US$210 billion expected two months ago. Almost 30 per cent of the investors think the amount could even exceed US$300 billion this year.
Worries over excessive AI investments and valuations have overtaken concerns about credit markets being overpriced and geopolitics, the survey showed.
“Bubbles in credit are no longer the number one fear, [falling] from 27 per cent to just 10 per cent,” the survey said. ‘Only 10 per cent say geopolitics is their big worry, despite growing US-Iran tensions.”
