US Treasury warns AI boom could trigger financial system shock

Internal analysts at the U.S. Treasury have drafted a report warning that the rapid expansion of artificial‑intelligence investment could destabilise the broader financial system. The draft, intended for Treasury Secretary Scott Bessent and Federal Reserve Chair Kevin Warsh, likens a potential AI market collapse to the early‑2000s dot‑com bubble, noting that AI firms are now more deeply embedded in the economy. It predicts that a downturn could ripple through equities, private‑credit markets, data‑center financing, cloud providers, semiconductor manufacturers and utility companies.

Lawmakers are responding, with Senate banking committee staff calling for data collection on AI‑related debt and a bill to require financial firms to disclose AI‑investment exposure. Despite the report, the Trump administration continues to promote AI, unveiling the “Trump Accounts” platform and an AI Action Plan that accelerates data‑center construction while rolling back previous AI regulations. International bodies such as the IMF and BIS have also voiced concerns about excessive AI infrastructure spending.

The Treasury warning highlights growing uncertainty over whether AI‑driven productivity gains will materialise, and stresses that the financial system’s stability may increasingly depend on the sector’s performance.