What specific risks does BofA tie to the AI trade?

BofA says a slowdown would hit growth directly and through the wealth effect as stock gains that propped up spending reverse. It also ties some of the rise in interest rates to borrowing needed for the buildout.

How much are the biggest tech companies spending on capex?

The biggest tech companies are on track to spend roughly $800 billion on capex this year, up 96%, and analysts expect $1.2 trillion next year, according to Goldman's Ben Snider.

What does Goldman Sachs expect for data-center attention after Tuesday?

Goldman's Alec Phillips expects attention to data centers to fade somewhat after Tuesday, noting the issue ranks low among voter priorities and that a national moratorium looks unlikely under any outcome.

AI Stocks & MarketsAI Business & IndustryFortune AI1h agoNov 3, 2026, 01:00 JST

BofA warns AI correction is a major risk to global economy

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3 Key Points

What happened
BofA Global Research economists wrote Monday that "a sustained correction in the AI trade is a major risk to the global economy," warning that rising capex adds risk and that a slowdown would hit growth directly and via the wealth effect.
Why it matters
The warning implies that stock gains propping up spending could reverse if the AI trade corrects, and BofA also ties some of the rise in interest rates to borrowing for the buildout, meaning a pullback could ripple through both growth and financing costs.

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Context & Analysis

BofA's warning lands the day before a midterm vote in which data centers are on the ballot in 10 states, with 41 local measures ranging from new requirements for developers to outright bans on construction. All six data-center measures already decided this year went against development, and the backlash has reached the top of the ticket, with Texas Gov. Greg Abbott halting new approvals pending an audit and Ohio Sen. Jon Husted on the defensive over past support. Goldman Sachs expects the issue to fade somewhat after Tuesday, though Congress might limit tax breaks for data centers.

The buildout continues regardless. Data-center construction spending hit a preliminary record annual rate of $84.95 billion in August, up 73% from a year earlier, and AI-related hardware investment is now $613 billion above its 2022 level, about 1.9% of GDP. Goldman's Ben Snider notes the S&P 500 has fallen 3% since earnings season began while the S&P 500 excluding AI stocks has risen 5%, suggesting the rest of the market has started to pull its own weight.

AI's imprint on jobs is increasingly visible, with 24.6% of U.S. businesses using AI in at least one function and layoffs attributed to AI reaching 4,000 in September and 207,000 since May 2023. Outside AI, the Goldman Sachs Analyst Index fell below 50 for the first time since April 2025, and analysts named the war in Iran as the top risk for 2027, with AI spending and adoption next.

FAQ

What specific risks does BofA tie to the AI trade?: BofA says a slowdown would hit growth directly and through the wealth effect as stock gains that propped up spending reverse. It also ties some of the rise in interest rates to borrowing needed for the buildout.
How much are the biggest tech companies spending on capex?: The biggest tech companies are on track to spend roughly $800 billion on capex this year, up 96%, and analysts expect $1.2 trillion next year, according to Goldman's Ben Snider.
What does Goldman Sachs expect for data-center attention after Tuesday?: Goldman's Alec Phillips expects attention to data centers to fade somewhat after Tuesday, noting the issue ranks low among voter priorities and that a national moratorium looks unlikely under any outcome.

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