BIS says AI-led market momentum is showing signs of vulnerability

The Bank for International Settlements — the club for the world’s central banks — published its September 2026 Quarterly Review saying AI-driven equity momentum “wobbled amid growing signs of vulnerability” in the tech sector. Investors worry about whether big AI bets will stay profitable and about rising leverage at major U.S. tech firms, the report says, even as overall risk appetite proved resilient and credit markets stayed relatively calm.

When the central-bank club says AI equity momentum is wobbling on leverage and profit doubts, that is a same-day money-desk signal separate from any single stock selloff. The warning is not that AI is dead — it is that the boom’s financing and valuations look more fragile even while risk appetite has not cracked.

The overview is titled “Yields climb, yet risk appetite holds firm.” Bond yields are the interest rates governments and companies pay to borrow. Risk appetite is how willing investors are to buy riskier assets. The BIS says higher-rate prospects and fiscal worries compounded “markets’ unease about valuations and possible overinvestment in the tech sector, disrupting the equity momentum driven by artificial intelligence (AI).” Yet while investors’ risk appetite “ebbed and flowed, it proved resilient on the whole.”

Direct BIS line: “The AI-led momentum in global equity markets wobbled amid growing signs of vulnerability in the tech sector.” Rising concerns about the future profitability of significant AI investments and the sustainability of large profit margins were “fuelled by the increasing leverage of major US tech firms.” Leverage is how much borrowed money sits on top of equity. Despite some price corrections, “valuations stayed elevated across US equities,” the BIS says.

The BIS says bouts of aggregate volatility — how jumpy the whole market is — stayed contained, even after “the failure of a highly leveraged AI-focused hedge fund,” while idiosyncratic risks — problems in single names, not the whole market — “perked up beneath the surface.” The BIS does not name that fund. This desk does not invent a name.

In the United States, the BIS says small caps performed better and outpaced tech firms. Non-U.S. markets generally outperformed the United States. Euro-area equities posted gains, helped by a smaller tech weight and strong bank performance. Korean markets “whipsawed” on heavy semiconductor exposure, magnified by leveraged positioning. File those as the BIS’s market picture — not as this desk’s tape.

Credit markets, the BIS says, only partly reflected the shift. Spreads — the extra yield investors demand to lend to companies versus safer government bonds — stayed compressed by historical standards, meaning borrowing still looked cheap. Investors tilted toward higher-quality borrowers. Large tech firms ramped up bond issuance, especially at longer maturities. Issuance slowed in riskier segments.

A key takeaway bullet in the same overview: “AI-driven momentum wobbled, given concerns about valuations and potential overinvestment, but investors reallocated their bets across other sectors and countries, underscoring resilient risk appetite.” Another bullet says credit markets were “relatively unscathed” even with surging bond issuance by large tech firms. Do not read that as a crash, a recession, or a claim that an AI bubble popped. The BIS is flagging vulnerability signs while saying appetite held.

Reuters’ Marc Jones, writing from London on 14 Sep 2026 at 11:05 AM UTC, reported a briefing by Frank Smets, the BIS head of economic analysis. Reuters says the comments were made Friday ahead of Monday’s publication. Smets told reporters the AI momentum “has begun to show growing signs of vulnerability.” Reuters also reports the BIS said investors were becoming “increasingly cautious” about the profitability of future AI investments as leverage at major U.S. tech firms rose. Smets said the biggest concern is “the rapid increase in debt and leverage,” and that many financing deals are “quite opaque,” often off balance sheet, with “circularity.” He also said there were “no signs of stress” overall and that risk appetite had remained “remarkably resilient.” File those as Reuters / Smets — not as extra numbers this desk invented.

The same Reuters dispatch cites BIS report figures on tech private-credit growth: aggregate borrowing by tech firms from around $22 billion, or 22% of private credit, in 2010 to over $1 trillion, or 44%, by 2025, with outstanding loans of any type almost $2.5 trillion. Private credit is lending that sits outside the usual public bond market — often loans negotiated directly with borrowers. File those figures as Reuters’ reporting of the BIS material. This desk did not recount the loan tape.

CONFIRMED here: the BIS September 2026 Quarterly Review, published 14 Sep 2026 — PRIMARY. REPORTED: Reuters’ same-day Marc Jones wrap of the Smets briefing. NOT claimed: a crash, a recession, that an AI bubble popped, a named failed hedge fund, a single-stock call, or investment advice. Distinct from the already-filed asia-chips-plunge-ai-slowdown, softbank-tokyo-plunge-ai-safety, firmus-australia-ipo-5b-ai-infra, temporal-550m-series-e, and buildots-130m-data-center-ai.