AI investment boom a major uncertainty for financial stability: MAS chief

A pullback could hit global growth, asset values, and financial markets.

The sustainability of the global artificial intelligence (AI) investment boom is a major uncertainty for economic growth and financial stability, according to Monetary Authority of Singapore (MAS) Managing Director Chia Der Jiun.

Global growth, investment, and financial-market performance have become increasingly dependent on continued spending on data centres, semiconductor chips, and computing infrastructure.

“This is particularly so in the US and semiconductor-exporting Asian economies,” Chia told the MAS Annual Report 2025/2026 media conference.

This comes as AI-driven electronics accounted for more than 70% of Asia’s export growth so far this year, up from 46% in 2024. AI-linked companies also made up about 40% of the S&P 500’s market value and over 30% of the MSCI Emerging Markets Asia Index.

These companies represented about half of US investment-grade bond issuance, 38% of high-yield issuance and 87% of new venture-capital funding, Chia noted.

“Whilst near-term investments are supported by committed orders and strong hyperscaler cashflows, there is greater uncertainty around the sustainability of these investments in the medium term,” he said.

Large amounts of equity and debt financing would be needed in the coming years, whilst markets would increasingly expect commercial revenue growth to justify the financing risks.

In addition, he cited “clear risks on the path of AI investment monetisation,” including rising energy and chip costs, raw-material supply bottlenecks, regulatory uncertainty, and competition among model providers.

The returns would also depend on whether AI productivity gains at individual companies broaden across the economy and produce more transformative commercial applications.

Should returns fall short of expectations, hyperscalers could slow investment and markets could reassess asset valuations, Chia said.

Conversely, a prolonged AI investment boom supported by broader productivity gains could lift incomes and demand, but could also add pressure to inflation through increased demand for energy and other inputs.

“These will have consequences for central banks’ assessment of potential output and neutral interest rates,” Chia added.

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