AI tops the risks to the financial system in the Fed's survey, named by 87% of market contacts
Artificial intelligence was the most cited risk to the US financial system in a survey published with the Federal Reserve's Financial Stability Report on Friday.
The New York Fed asked 23 contacts at banks, broker-dealers, investment funds and advisory firms about the risks they see. They answered in September and October.
Of those contacts, 87% named AI, up from 50% in the spring survey. No other risk came close. The next four were:
- A correction in risk assets: 52%
- Higher long-term interest rates: 48%
- Cyberattacks: 43%
- Fiscal debt sustainability: 43%
The AI worries fell into three groups. One was high stock valuations that could drop if earnings disappoint. The second was cyberattacks, whether by state actors or "damage caused by frontier AI models themselves." The third was "complex forms of AI-related financing."
The survey gives the contacts' views, not the Fed Board's. But the Board's own assessment also finds stock valuations high, "partly driven by market enthusiasm for super intelligence." The S&P 500's forward price-to-earnings ratio remains well above its historical median.
A separate section of the report looks at how the data center buildout is paid for. Debt issued for AI computing infrastructure reached more than $680B by October, up from $130B in all of 2023.
Commitments that stay off the balance sheet have grown faster. For Amazon (AMZN), Alphabet (GOOGL), Broadcom (AVGO), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA) and Oracle (ORCL), leases that have yet to start exceed $1T. Guarantees and other contract commitments exceed $2T.
These deals tie the biggest tech companies to smaller, riskier ones, often with equity stakes on top, which the Fed calls a "circular financing" dynamic. The report warns that the large firms' exposure to a downturn "may be substantially larger than suggested by their on-balance-sheet liabilities."
The largest US banks have close to $1T of exposure to tech firms, data center developers, related financing vehicles and utilities.
Outside AI, the Fed found the system broadly stable. Banks remain sound, but leverage at hedge funds reached a record in data going back to 2013.
The report came out at the end of a weak day for tech stocks. The Nasdaq 100 closed 1.2% lower on Friday and the S&P 500 0.4% lower.
The report uses data up to October 28. The Fed publishes it twice a year, so the next one is due in the spring.
Sources & Further Reading
- "Financial Stability Report, November 2026." Board of Governors of the Federal Reserve System. November 13, 2026.
- "AI risks are the biggest threat to the financial system, Fed survey finds." CNBC. November 13, 2026.
This article was drafted with the help of AI. Kris Gunnars fact-checked, edited and published the article and is responsible for its accuracy and quality. How we use AI
