Bank for International Settlements Warns the AI Investment Boom Looks Like Past Bubbles

On June 28, 2026, the Bank for International Settlements published its annual economic report, warning that the current AI investment boom is starting to look like the canal and railroad manias of the nineteenth century. The report notes that the five largest hyperscalers plan more than one trillion dollars in capital expenditure between 2025 and the end of 2026, and that market expectations for cloud spending in 2026 have been revised upward by nearly 80 percent in just six months.

The report places the AI cycle alongside three earlier episodes: the 1830s canal boom in the United States, the 1840s railway mania in Britain, and the dot-com boom of the late 1990s. In each case, a real technology eventually changed the economy, but the capital that flowed in during the boom far outran the cash the technology could generate, and every cycle ended in a sharp bust and a recession.

BIS argues that today's setup carries two extra risks that earlier cycles did not have. Households now hold a higher share of their wealth in equities than at any point in recent memory, so a sharp correction would spread quickly into consumer spending. Non-bank financial institutions, from hedge funds to private credit funds, are also providing more leverage inside the AI infrastructure chain, and the rules around how that risk is shared are not fully transparent.

The lesson is not that AI is a fake technology. It is that prices and capital plans have moved ahead of the returns the technology can plausibly deliver over the next few years. BIS calls on central banks and regulators to keep policy disciplined, to extend oversight beyond banks, and to remember that being right about the technology has never been enough to make an investment cycle profitable.