Issue Risk of an AI investment bubble bursting

Summary

The report describes a surge in AI infrastructure investment amid competition between the big technology firms, with sector capital spending almost doubling since early 2025. Concerns are raised that this spending lacks a solid earnings model to justify it, and the chips installed in data centres could become obsolete before they generate profit. Inside companies, the effect of AI on operating profit remains limited so far, and large investments do not always outweigh modest profit expectations. Should the AI hype collapse, pension funds, insurers and other investors could take heavy losses. In an unfavourable scenario such a shock could coincide with global geopolitical conflicts and inflated energy prices. The report judges that the danger of financial instability and of bubbles bursting is growing.