87% of Fed Survey Contacts Now Call AI a Top Financial Risk

Eighty-seven percent of the market contacts the Federal Reserve surveyed this fall named artificial intelligence as a salient risk to the US financial system — up from 50% in spring 2026 and 30% a year earlier. The number comes from the Fed's twice-yearly Financial Stability Report, released Friday, Nov. 13, and from a New York Fed survey of 23 market contacts conducted in September and October, as CNBC and Investing.com reported.

For the first time, AI tops the list. A correction in risk assets came second at 52%, followed by higher long-term interest rates at 48%, cyberattacks at 43% and fiscal debt sustainability at 43%. In the spring survey, geopolitics and an oil shock led the list and AI ranked third; fewer respondents flagged private credit this time around.

Respondents named three AI-related concerns: elevated equity valuations that could fall if earnings disappoint, cyberattacks by state actors or damage caused by frontier AI models themselves, and what the report calls "complex forms of AI-related financing."

That financing worry is where the report gets concrete.

How big is the AI debt buildout?

A box in the report titled "Leverage in the Data Center Buildout" puts hard numbers on it. Advanced computing-related debt issuance passed $680 billion by October 2026 — roughly five times the $130 billion issued in all of 2023. Its share of nonfinancial investment-grade corporate issuance climbed from under 6% in 2023 to about 31% this year.

The Fed estimates outstanding public debt tied to advanced computing at more than $1.1 trillion, with additional private credit deals making the true total harder to measure. Bond investors see the same thing: PIMCO said this week that AI borrowers account for nearly half of long-dated US investment-grade issuance.

Then there's what's off the books. For seven companies — Amazon, Alphabet, Broadcom, Meta, Microsoft, Nvidia and Oracle — not-yet-commenced leases exceed $1 trillion, and take-or-pay contracts, residual value guarantees and similar commitments exceed $2 trillion. Both figures are undiscounted. Together they dwarf the debt itself.

Why does 'circular financing' worry the Fed?

The mechanics are tightly linked. Hyperscalers sign long leases that developers use to borrow for construction. GPU makers guarantee the residual value of chips used as collateral, often alongside equity stakes — a dynamic the Fed explicitly labels "circular financing."

Those links could let the largest firms absorb losses in a downturn. But the report warns their economic exposure "may be substantially larger than suggested by their on-balance-sheet liabilities."

The risk sits across the system. The subordinated debt and equity tranches of these deals are held by high-yield bond funds, life insurers, business development companies and other private debt vehicles. The largest US bank holding companies carry close to $1 trillion of exposure to big tech, data center developers, related special purpose vehicles, private credit funds and utilities. The Fed also notes that hyperscaler capital spending, scaled to GDP, may soon outpace the late-1990s telecom buildout.

What else does the report flag?

Outside AI, the Fed rated vulnerabilities from business and household debt as moderate and called the banking system sound. But hedge fund leverage hit its highest level since the data began in 2013, concentrated in a small number of large funds. Equity valuations remain well above historical medians, "partly driven by market enthusiasm" for advanced AI. Private credit default rates rose to the upper end of their short history.

One timing note: the survey closed before this week's turmoil at Nvidia, where Jensen Huang resigned as chief executive on Nov. 12. Among near-term risks, the Fed said an unexpected downturn in corporate earnings could trigger falling asset prices, tighter credit and a pullback in capital spending — at a moment when investment in new computing technology has been a significant driver of US growth this year.

With AI sentiment now the survey's top-cited risk three surveys running upward, the Fed's next report, in spring 2027, will show whether the $1.1 trillion debt stack and $3 trillion in off-balance-sheet commitments sharpen or ease that anxiety.