Fitch warns an AI-driven correction could tip the US into recession

Fitch Ratings warned that a collapse in AI spending could tip the United States into recession¹. In its September outlook the agency raised its global GDP growth forecast for the year by 0.2 percentage point to 2.6 per cent, from 2.4 per cent, while retaining its projections for the two following years^1,2,3. Under the agency’s downside case, an AI-driven market correction would push global growth below 1 per cent³.

The spending forecasts themselves keep rising. Goldman Sachs projects hyperscaler capital expenditure of roughly $1.2 trillion, above market consensus^4,5. One summary put the increase in AI capital expenditure at 54 per cent⁶. Another estimate placed next year’s hyperscaler capex between $1.1 trillion and $1.2 trillion, with memory alone accounting for 50 to 60 per cent of the total⁷. The-decoder said the bank’s figure dwarfs Wall Street estimates⁵.

Why it matters to investors

Goldman Sachs strategist Ben Snider wrote that mega-cap US hyperscalers are on track to spend $800 billion on capital expenditure this year, an increase of 94 per cent on the prior year, and flagged the depreciation charge that follows as an earnings headwind and an accounting complication⁹.

The financing is now a credit market story. A Financial Times report described hyperscalers borrowing across global debt markets, with Meta set to debut in European bonds⁸. Morningstar quoted an analyst saying that as hyperscalers ramp up spending and compete for labour, power and construction capacity, the AI capex boom shifts desired investment upward¹⁰. Goldman argues that slowing capex growth would be positive for the hyperscalers, whose valuations have fallen to a ten-year low⁶.

What to watch

Supervisors have started using the language of systemic risk. The Kansas City Fed has flagged too-big-to-fail risk in the AI ecosystem¹³, and the concern that the boom is creating such exposures has spread as the ecosystem expands¹². One analysis asked directly whether hyperscalers are this cycle’s version of the banks of the last crisis¹¹.

Two near-term markers stand out. The first is whether the debt market keeps absorbing hyperscaler issuance on current terms⁸. The second is whether data centre projects clear investor scrutiny, with one prospective November listing pushing ahead despite it¹². Fitch’s base case still has the global economy resilient²; the warning is about what happens if the spending stops.