Fed warns of growing AI risks to financial stability
The Federal Reserve (Fed) announced in its November 2026 Financial Stability Report that artificial intelligence has become the most frequently cited risk to the financial system.
Survey respondents highlighted concerns over elevated stock market valuations, AI-powered cyberattacks, and complex financing structures used to fund technology investments. The report also identified potential corrections in risky asset prices, rising long-term U.S. Treasury yields, and government debt sustainability as major threats. Compared with the May survey, concerns increased most significantly regarding artificial intelligence, long-term interest rates, and cyberattacks.
The Fed highlighted the rapid increase in borrowing to finance investments in advanced computing infrastructure. As of October 2026, debt issuance in this sector exceeded $680 billion, approximately five times the $130 billion recorded in 2023. The sector's share of total investment-grade debt issuance by nonfinancial corporations rose from less than 6% to approximately 31%. The Fed also estimated that total outstanding debt linked to advanced computing technologies in public markets had surpassed $1.1 trillion, warning that transactions in private credit markets make it more difficult to assess the full extent of financial risks.