“The race to capture market share may have led to overinvestment,” said Pablo Hernández de Cos, general manager of the BIS. “This could leave the sector more vulnerable if AI under delivers, possibly bringing the current investment boom to an abrupt end.”
The BIS noted that previous episodes in which very large sums were quickly invested in new technologies-such as canal construction in the 1830s, British railways in the 1840s, electrification in the late 1920s and the dot-com boom of the late 1990s-all led to busts with severe consequences.
“These episodes ended with an eventual reversal in investment, inducing economy-wide recessions,” the BIS said. “The scale and pace of the current AI investment boom accompanied by expectations of large productivity payoffs bear resemblance to these precedents, highlighting potential downside risks in the near term.”
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