Five warning signs of potential market risks! The AI bubble and the US debt crisis may be approaching simultaneously.

When the stock market is booming, the bond market is often the first to sense the risks.

US stocks hit new records again this week, seemingly amidst an optimistic outlook. However, credit default swap (CDS) prices for AI-related borrowers—including Meta, Google, and Microsoft—are quietly rising, with Oracle seeing a particularly significant increase; SpaceX's CDS prices jumped sharply this week after reports that it was seeking $40 billion in funding. Meanwhile, the yield on the 10-year US Treasury note has broken through 5%, a significant rise from its previous level of around 4%.

These signals are easily overlooked when market sentiment is high, but history provides numerous precedents. Twenty years ago, the rise in mortgage-backed securities and bank CDS prices, occurring amidst a stock market frenzy, foreshadowed the subsequent crisis. The Financial Times has identified five key issues for investors to assess the risks ahead.

AI Revenue Forecasts: Optimism or a Bubble?

Earnings expectations for tech companies are the core support for current market valuations. Torsten Sløk of Apollo points out that analysts currently expect surging demand for AI to drive the tech sector's operating cash flow to double to approximately $2.4 trillion by 2028.

However, analysts also predict relatively weak future cash flow for non-tech companies. This raises a crucial question: who will ultimately pay for these AI services? If tech industry clients are overly pessimistic, the expectations may eventually materialize; but if tech companies' forecasts themselves are overly optimistic, the current boom may just be a bubble that will eventually burst.

AI Capital Expenditure: Debt Expansion Causes Funding Crowding

The construction of AI infrastructure is fueling an unprecedented wave of debt financing. Tech giants, having exhausted their internal resources, have begun borrowing heavily to support their capital expenditure plans. Greg Peters, a senior official at PGIM, recently told the Financial Times, "The amount of debt flooding the market is historic."

This trend has begun to siphon funds from other industries. Some financial experts have suggested that the US needs "an institution similar to Fannie Mae to finance AI development"—that is, to repackage technology debt in a manner similar to mortgage securitization. While this idea is unlikely to materialize, it sufficiently reflects the magnitude of the funding gap.

US Treasury yields: Fiscal pressures becoming increasingly difficult to manage

U.S. Treasury Secretary Scott Bessent had previously used strategies such as shortening bond issuance maturities to keep the 10-year Treasury yield around 4%, but these measures have shown signs of fatigue—yields have jumped to over 5%. Bessent himself maintains that AI-driven economic growth will eventually reduce the fiscal deficit, thereby alleviating pressure.

Many Wall Street figures believe that a debt crisis can be avoided as long as the US economy grows at a rate above 3%. However, the changing financial landscape is complicating the situation. Brad Setser of the Council on Foreign Relations points out that "East Asia now has a huge trade surplus, but almost none of it flows into the US bond market."

Meanwhile, banks have reduced their purchases of Treasury bonds due to their involvement in AI financing. As a result, hedge funds have gained significantly more influence in US Treasury pricing, and they could quickly withdraw in the event of market turmoil, further pushing up interest rates. Prominent short-seller Jim Chanos warned that "the refinancing risk of legacy data centers is real."

Oil price risks: Geopolitical conflicts may push up interest rates

Energy prices pose another potential threat. While the global economy can currently withstand the energy price increases resulting from the conflict in Iran, a senior Saudi official revealed that current oil inventories are "worryingly low," and there is indeed room for further price increases.

Iranian Parliament Speaker Mohammad Bagher Ghalibaf recently stated on social media that Tehran intends to create financial pressure by pushing up oil prices and US interest rates through its blockade. Financial commentator Jay Martin warned that "Iran is unable to militarily confront the US, and therefore is targeting the US's $40 trillion debt."

AI Slowdown: The Cost of the Growth Engine Stalling

Currently, the US economy remains robust. A recent study by NYU Stern School of Business and DHL shows that global merchandise trade growth in the first half of 2026 will be the fastest in the past 15 years, second only to the post-pandemic rebound. However, 76% of this growth is driven by AI-related trade, and technology investment has also contributed significantly to recent US growth.

If the AI boom cools down due to rising interest rates, security concerns, or restrictions on data center construction, growth momentum will be directly impacted. This also explains why Trump has taken a hard line against AI critics—the integrity of the AI narrative is now deeply intertwined with the stability of the current macroeconomy.

These current problems do not necessarily foreshadow an impending stock market crash—as the experience of twenty years ago showed, irrational market exuberance can persist for a considerable period. However, the simultaneous warnings from multiple sources mean that investors can no longer ignore these "canaries in the coal mine."

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