AI ‘Contagion Channels’ Show Huge Economic Risk If Bubble Bursts

Investors have poured billions of dollars into companies leading the artificial intelligence boom, and a sharp drop in valuations would have dire consequences for the credit market and the broader US economy, according to Moody’s Ratings.

With Big Tech firms set to hit $500 billion in data center investments this year, some investors have warned that the market is too exuberant, creating a speculative frenzy. In a new report, Moody’s analysts led by Vincent Gusdorf stopped short of declaring a bubble, but they do map out a scenario where valuations of AI-related companies fall by 40% in the coming ...