Middle East tensions, tighter financing and weakening AI pricing power could test Big Tech's spending spree, the rating agency says
Big Tech is spending on artificial intelligence like the bill will never arrive. Fitch Ratings would like a word.
The credit rating agency says Middle East risks and tighter financing conditions threaten the AI spending boom before 2027.
The numbers behind the nerves
Fitch projects that US hyperscalers, including Alphabet, Amazon, Meta and Microsoft, will lift their 2026 capital expenditure by over 75%, to approximately $700 billion.
Fitch expects that spending could keep rising. The agency’s analysis suggests capex from these leading hyperscalers could exceed $1 trillion a year from 2027 to 2029. Fitch describes that figure as significantly higher than what was previously considered justifiable.
IT capital investment added 1.4 percentage points to US GDP growth in the first quarter of 2026, according to the research.
Corporate bond issuance rose 26% in the first half of the year. Six major issuers raised $182 billion in investment-grade bonds in 2026, with AI the largest driver.
Fitch notes that corporate valuations and debt issuance are pushing toward levels that recall the dotcom bubble of the late 1990s.
Pricing power is slipping
Fitch’s sharper critique sits in a report released on September 15, 2026. There, the agency flagged deteriorating pricing power for frontier AI models.
Two forces are behind it. Competition among model developers is escalating, and enterprise customers are becoming more price sensitive.
The result, in Fitch’s view, is a growing disconnect. Capex budgets keep expanding while the prospects for actually monetizing that spending have softened.
Fitch suggests a reassessment may be imminent within the next one to three years.
Geopolitics enters the chat
The earlier warning came in Fitch’s July 28, 2026, Global Risk Outlook. That report identified an AI market correction as an emerging and significant global credit risk.
Fitch pointed to tensions in the Middle East, particularly between the US and Iran, as a factor that might tighten financing conditions for companies in the sector.
Regional companies are already feeling the pressure. Fitch described the corporate outlook for Gulf Cooperation Council firms as “deteriorating” as of June 2026.
The agency also expects heightened supply chain costs and limited access to debt financing may further challenge companies operating in the region.
Where the stress shows up
Fitch ran stress tests to see what happens if hyperscalers pull back. Credit metrics proved generally resilient across most sectors.
Semiconductors and specific types of data-center financing stood out as high risk. Those categories scored 60 on Fitch’s scale for over-investment risk.
Fitch also warned that a capex pullback could hurt counterparties across related industries.
