Bank of England Warns of AI Debt and Unrealistic Expectations

The Governor of the Bank of England has issued a warning to investors about the potential risks and uncertainties surrounding artificial intelligence (AI) investments.

In an interview, Andy Bailey noted that there is a significant amount of investment flowing into the AI sector, but cautioned that its contribution may not be as great as financial markets expect. He also warned that AI debt could pose a risk to investors.

The Bank of England's Financial Policy Committee (FPC) meeting on September 25, 2026 reported that AI-related investments are being financed through debt issuance, which can complicate the assessment of risks and amplify losses if expectations disappoint. The FPC also noted that growth prospects and fiscal outlooks depend partially on the expectation that AI development and adoption will generate significant productivity gains.

Gartner analyst predicted that AI capital investment would not achieve a return on invested capital (ROIC) of 12% until 2032 at the earliest, which could lead to investors waiting more than five years for measurable returns. Additionally, publicly listed AI companies may increase costs as they look to fund continued investments in expensive AI acceleration hardware.