Global debt has exceeded $350 trillion, almost three times the size of the world economy, according to figures from the Institute of International Finance cited by Reuters. The accumulation of public and private liabilities is taking place as governments and companies face higher borrowing costs and a more uncertain geopolitical environment.
The rapid expansion of AI infrastructure has been a major source of support for equity markets and corporate investment. Technology companies are committing substantial sums to data centres, chips and computing capacity in anticipation of future demand. However, the scale of spending has increased questions about whether revenue growth and productivity gains will ultimately justify the capital being deployed.
A sharp slowdown in AI investment could affect more than technology shares. Companies that have borrowed to finance infrastructure may face pressure to service debt if expected returns fail to materialise. Suppliers, construction firms, utilities and other businesses linked to data-centre development could also experience weaker demand, while falling asset prices may reduce household and institutional wealth.
The risks are unfolding alongside the economic effects of the conflict involving Iran. Higher energy prices have added to inflation pressures and complicated the task facing central banks. If policymakers keep interest rates elevated to contain price growth, governments and highly leveraged businesses may face further increases in debt-servicing costs.
Reuters cited Sheila Bair, the former chair of the US Federal Deposit Insurance Corporation, as warning that increased leverage among parts of the financial system could create vulnerabilities, particularly where AI companies are relying more heavily on debt to fund expansion. The concern is compounded by the limited fiscal capacity of heavily indebted governments to respond to another major crisis.
Emerging markets are also exposed through higher oil-import costs, currency weakness and tighter financial conditions. A simultaneous shock to energy supply, technology valuations and sovereign borrowing could therefore transmit across regions and asset classes.
The central issue is not whether AI investment will continue, but whether the financial system can absorb a reassessment of its expected returns. With debt at record levels and policy coordination under pressure, a market correction could have consequences beyond the companies at the centre of the technology boom.
