Half of Market Participants Name AI a Possible Financial Shock

The Federal Reserve’s Financial Stability Report, released May 8, shows 50% of market participants surveyed view artificial intelligence as a potential shock to the U.S. financial system. New York Fed staff surveyed 20 market professionals in March and April, including people at broker-dealers, banks, investment funds and advisory firms. In the spring 2026 survey, half of respondents named AI among risks over the next 12 to 18 months, up from 30% in a fall 2025 survey. AI ranked alongside geopolitical tensions, an oil shock, persistent inflation and private credit stress. The report notes the survey reflects market participants’ views, not the official positions of the Federal Reserve Board or the New York Fed.

Respondents identified several channels by which AI could affect financial stability. Elevated equity valuations tied to AI optimism could fall if revenue or profit expectations weaken. Capital spending on AI that is financed with borrowing could increase leverage across companies and their lenders and tighten links between corporate balance sheets and funding markets. Some participants flagged the potential for AI adoption to reduce demand for some types of labor.

Private credit markets were also named as a channel of concern. Survey responses mentioned redemption requests and softer sentiment in parts of the private credit market and said AI-related disruption could weaken credit quality for some borrowers. That, in turn, could affect lenders, leveraged financing arrangements and investor confidence beyond public technology shares.

The report did not predict an AI-driven crisis or conclude that AI spending is already destabilizing markets. It said market professionals are watching how AI-related debt could interact with high asset prices and tighter financial conditions if expectations change. The report added: “Respondents raised several risks related to AI, including equity valuations; that capital expenditures are increasingly funded by debt, creating leverage in the system; and that widespread adoption of AI may contribute to labor market weakness.”

The Financial Stability Report places the survey results within the Fed’s broader assessment of the U.S. financial system and the risks policymakers monitor for employment, price stability, the banking system and payments.