Federal Reserve Governor Bowman Warns of AI Investment Risks: Returns Below Expectations Could Trigger Major Stock Market Correction

Deep Tide TechFlow, November 11: Michelle Bowman, Vice Chair for Supervision of the Federal Reserve, warned during a speech in Washington on November 10 that if artificial intelligence (AI) investment returns fall short of expectations, U.S. equity markets could see a major valuation correction, affecting economic growth through consumer spending and financing costs.

Bowman noted that AI-related debt financing has been growing rapidly, spanning corporate bonds, private credit, and project financing, with the scale expected to exceed $800 billion this year. Large technology companies are supporting smaller companies' financing through off-balance-sheet liabilities while investing in AI companies that purchase their products, creating potential circular financing risks.

In addition, Bowman said U.S. inflationary pressures remain persistent, but the benefits and costs of further tightening monetary policy need to be weighed carefully, and she did not explicitly support a rate hike in December.

Source: Deep Tide TechFlow