AI Spending Could Be a $2.5 Trillion Bubble

By Andrew Miiller • July 2, 2026

The huge excitement around artificial intelligence could fade soon, the Bank for International Settlements is warning. In its annual report released Sunday, the Swiss-based central bank for central banks cautions that the current AI-spending boom—forecast to reach $2.5 trillion worldwide in 2026—may prove unsustainable.

Supply shortages, intense competition and complex financing deals could lead to over-investment and a sharp pullback if expected payoffs disappoint.

AI is clearly a world-changing technology. However, the massive demand for electricity to run data centers is already pushing up power prices and straining grids. Building new data centers also faces bottlenecks in land, materials, labor and permitting.

Many businesses are still investing in AI without clear ways to measure financial returns, making these supply shortages especially risky.

The bis warns this could mirror past bubbles, like the dot-com bubble, which inflated Internet-related stocks to resemble a $3 trillion valuation by March 2000, then lost 78 percent of its value.

Of the hundreds of Internet companies that went public in the late 1990s, about half were out of business or delisted by the end of 2002. The Internet did indeed change the world, but the investing frenzy produced catastrophic financial losses, clearing the way for survivors like Amazon and Google to dominate.

If this history repeats itself with AI businesses, U.S. gdp could drop 1 to 3 percent, and higher unemployment could last a couple of years.

Most technological revolutions create an initial bubble that wise investors anticipate. Yet the bis is warning of three other economic risks—inflation, fragile bond markets and soaring government debt—that could make the bursting of an AI bubble in 2026 especially painful.

The U.S. national debt is more than seven times bigger than it was during the dot-com bust.

The late Herbert W. Armstrong predicted that a financial crisis in America would likely catalyze Europe to unite. Specifically, he warned in 1984 that a massive banking crisis in America “could suddenly result in triggering European nations to unite as a new world power larger than either the Soviet Union or the U.S.” The Bank for International Settlements is predicting that such a massive banking crisis may be imminent.