BIS Chief Warns AI Capex Arms Race Posing Systemic Risks

The head of the Bank for International Settlements (BIS) has sounded the alarm on the potential risks of an artificial intelligence (AI) capex arms race. According to Pablo Hernandez, the current AI spending spree, fueled by expectations of future returns rather than present profitability, poses a significant threat to the global economy. He cited historical examples, including the dot-com bubble and the 19th-century railway boom, to illustrate the dangers of unchecked spending driven by hype rather than fundamentals.