Even if you've never bought an AI stock, your portfolio may already be riding the boom. A new report from the Bank for International Settlements warns that the race to dominate artificial intelligence is driving unprecedented investment, raising the risk of market turmoil if expectations fail to match reality.

If you own an S&P 500 ETF, a retirement account or a global index fund, chances are you're already invested in the artificial intelligence boom—even if you've never bought shares of Nvidia.

The biggest technology companies now account for an outsized share of major stock indexes, meaning millions of investors have become increasingly dependent on a relatively small group of companies leading the AI race.

The new 2026 Annual Economic Report from the Bank for International Settlements (BIS), often called the central bank for central banks, argues that artificial intelligence could become one of the most important technological breakthroughs in decades.

Yet the BIS is concerned about the exuberant race to dominate the technology. The world's largest tech companies are expected to spend more than $1 trillion on AI infrastructure across 2025 and 2026, betting today's investment will generate tomorrow's profits. According to the BIS report, that spending boom carries financial risks that could extend well beyond the technology sector if those expectations fail to deliver.

Before investing, know your risk tolerance.

Why big tech's $1 trillion AI bet has economists worried

Artificial intelligence has become one of the biggest drivers of financial markets, corporate investment and economic growth. Yet economists see striking similarities between today's AI spending race and some of history's most famous investment booms, including the canal mania of the 1830s, Britain's railway bubble of the 1840s and the dot-com crash of 2000.

“The scale and pace of the current AI investment boom, accompanied by expectations of large productivity payoffs, bear resemblance to these precedents,” the BIS writes. “These episodes ended with an eventual reversal in investment, inducing economy-wide recessions.”

The comparison is not meant to suggest AI lacks real economic value. On the contrary, the report points to studies showing productivity gains of 20% to 50% for many workplace tasks, reinforcing the technology's long-term potential.

What concerns economists is why companies are investing so aggressively. Rather than reflecting confidence alone, the report argues the spending spree is increasingly being driven by competitive pressure. Microsoft, Amazon, Alphabet, Meta and other hyperscalers are racing to build AI infrastructure because they believe only a handful of companies will emerge as long-term winners.

“The intense competition raises the risk of firms over-committing resources to investment projects with still uncertain returns,” the report states, “leaving all firms vulnerable to disappointments in AI payoffs.”

That fear of being left behind has pushed AI capital spending to unprecedented levels. If the expected revenue growth fails to materialize, the report warns it "could trigger a sudden pullback in financing and turn the capex boom into a protracted investment bust." In other words, the greatest risk may not be the technology itself, but the sheer amount of money being committed before its long-term returns become clear.

The hidden debt behind the AI boom

Building data centers, buying advanced chips and expanding cloud infrastructure require enormous amounts of capital. While the biggest technology companies are funding much of that investment themselves, a growing share is being financed through private credit and other non-bank lenders that operate with less regulatory oversight than traditional banks.

The BIS warns that this has created an increasingly complex web of financial relationships linking hyperscalers, AI developers, semiconductor companies and infrastructure providers. In some cases, technology firms invest in AI startups while also signing multi-year contracts to supply them with computing power. Data centers, meanwhile, are often financed by third-party investors and leased back under long-term agreements.

"The terms of such deals are typically poorly disclosed," the BIS writes, "with risks of the same asset being pledged multiple times."

The concern is that these financing arrangements make it harder to assess where the risks ultimately sit. If AI investment slows or expected returns fail to materialize, funding could dry up quickly, putting pressure on companies throughout the supply chain—from chipmakers and construction firms to the lenders backing the expansion.

Because much of that financing now flows through private credit funds, hedge funds and other less-regulated institutions, the fallout could spread more rapidly than in previous market downturns. Zhang Tao, the BIS's Asia-Pacific representative, told the South China Morning Post that a correction could unfold "much faster than previous banking crisis episodes."

What this means for index fund investors

You may own more AI stock than you think. The largest technology companies now make up a significant share of the S&P 500 and many global indexes, leaving millions of retirement accounts and index funds increasingly tied to the fortunes of companies leading the AI race.

Also read: What should you do if AI takes your job.

A slowdown would also reach beyond technology stocks themselves. Companies building data centers, utilities expanding electricity networks, engineering firms, semiconductor suppliers and lenders financing AI projects have all benefited from the industry's rapid expansion. If investment slows, those sectors could come under pressure as well.

The BIS also writes that households are more exposed to equity markets than they were a generation ago. A broad repricing of AI-related stocks could therefore have a larger impact on household wealth, consumer spending and economic growth than similar corrections in previous decades.

Technological revolutions often take longer to generate widespread profits than investors initially expect. Railroads, electricity and the internet all transformed the global economy, but each experienced periods of overinvestment and painful market corrections before the long-term winners emerged. Artificial intelligence may follow a similar path.

For investors, this may be a good time to speak to your financial advisor or take a closer look into your portfolio’s overall exposure to AI stocks, and consider diversifying your risks or utilizing traspaso to transfer your mutual fund to a less-exposed one without triggering tax (here’s how it works).