AI risks top financial stability concerns, Fed reports

Artificial intelligence-related risks emerged as the leading concern for financial stability, the Federal Reserve said Friday in its semi-annual Financial Stability Report.

The survey found 87% of contacts cited AI as a significant risk to the financial system, up from 50% in the May survey. Respondents pointed to worries about cyberattacks, risks from complex AI-related financing structures, and the potential for an AI earnings slowdown to trigger a broader market correction.

The second most-cited concern was a broad correction in risk assets at 52%, while cyberattacks were flagged by 43% of respondents. Higher long-term interest rates worried 48% of those surveyed, and 43% cited fiscal debt sustainability as a concern.

The survey was conducted in September and October, before recent developments at chipmaker Nvidia. CEO Jensen Huang stepped down Thursday following revelations of extramarital affairs, including one involving a Chinese businesswoman whom the New York Times reported is under suspicion as a Chinese spy. The survey also preceded recent midterm elections where public concerns about AI were a central issue.

The Fed report highlighted the rapid increase in debt issuance tied to data centers and advanced computing infrastructure. Advanced computing-related debt issuance reached $680 billion by October 2026, a fivefold increase from all of 2023. This borrowing now represents nearly one-third of all nonfinancial investment-grade corporate debt issuance, compared to less than 6% three years ago.

The central bank compared the current debt issuance and investment in AI-related infrastructure to the broadband telecom investment cycle of the late 1990s, noting the current cycle may soon surpass that era.