Artificial intelligence was the most frequently cited threat to U.S. financial stability in a survey published Friday, Nov. 13, in the Federal Reserve Board’s semiannual Financial Stability Report.[1] Of the market contacts surveyed, 87% named AI as a risk, up from 50% in the spring survey.[2] The report also put AI-related computing debt issuance above $680 billion through October.[1]
Related: Fed’s Williams and Hammack Signal More Rate Hikes Ahead of the Dec. 8-9 Meeting.
What market contacts told the Fed
Staff at the Federal Reserve Bank of New York collected responses from 23 contacts in September and October.[1] They included professionals at broker-dealers, banks, investment funds and advisory firms.[1] The report states that the summary does not represent the views of the Fed Board or the New York Fed.[1]
After AI, the most cited risks were a risk-asset correction at 52%, higher long-term interest rates at 48%, cyberattacks at 43% and fiscal debt sustainability at 43%.[1] Cyberattacks and fiscal debt were viewed as having the most severe potential consequences.[1]
Respondents raised three AI concerns, the report said: “(1) elevated equity valuations and the possibility that lower-than-expected earnings could result in lower valuations and a market correction; (2) cybersecurity risk … and (3) risks associated with complex forms of AI-related financing.”[1] Many respondents said circular financing and heavy reliance on debt could amplify losses in a correction.[1]
Data center debt and off-balance-sheet commitments
Debt issued for advanced computing rose to more than $680 billion by October 2026.[1] That was about five times the $130 billion issued in all of 2023.[1] Such borrowing grew from less than 6% of nonfinancial investment-grade corporate issuance in 2023 to about 31% in 2026.[1] Outstanding public debt tied to advanced computing is estimated at more than $1.1 trillion.[1]
Other obligations have grown even faster.[1] Leases that have not yet started carry undiscounted values above $1 trillion.[1] Take-or-pay contracts, residual value guarantees and similar commitments exceed $2 trillion.[1] The Fed’s analysis covered Amazon, Alphabet, Broadcom, Meta Platforms, Microsoft, Nvidia and Oracle.[1]
The report said these firms’ exposure to a downturn “may be substantially larger than suggested by their on-balance-sheet liabilities.”[1] The largest U.S. bank holding companies have close to $1 trillion of exposure to large technology firms, data center developers, related special purpose entities, private credit vehicles and utilities.[1] Those exposures are evaluated in the annual stress test.[1] More AI industry coverage is on the AI news hub.
The Fed’s own assessment
The Board said asset valuation pressures remained elevated.[1] It said equity valuations were partly driven by “market enthusiasm for super intelligence.”[1] Treasury yields rose markedly since the May report.[1]
Hedge fund leverage reached its highest level since the data began in 2013.[1] It was concentrated in a small number of large funds.[1] The banking sector remained sound and resilient overall, with capital near historically high levels.[1]
Household debt relative to economic output stood below its historical median.[1] Auto loan delinquencies stayed well above their historical median.[1] Delinquencies on Federal Housing Administration mortgages kept rising in 2026.[1] The report reflects data available as of Oct. 28.[1]
The report comes as Fed officials signal more rate hikes may be on the table at the Dec. 8-9 policy meeting. Follow rate decisions on the Federal Reserve tracker and Friday’s market close in our Wall Street wrap.
Our Take
Opinion. The headline survey number is striking, but the more useful finding is in the data center box. Trillions in leases and guarantees sit outside reported debt. Investors who judge AI companies by balance sheets alone may be missing a large part of the bill.
Sources
- Federal Reserve Board: Financial Stability Report, November 2026 (PDF)
- CNBC: AI risks are the biggest threat to the financial system, Fed survey finds
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