Federal Reserve Governor Michelle Bowman warned that a shortfall in AI-related returns could trigger a "large correction" in stock prices. In her remarks she pointed to roughly $800 billion of AI-related debt, alongside off-balance-sheet liabilities and the circular financing that underpins much of the AI trade, as factors that increase market vulnerability.
Bowman said any such shock would "likely slow the AI buildout" and "soften" the economy. Her comments arrive as Anthropic, a frontier AI lab, prepares to list its shares publicly—an event that could concentrate investor expectations and market risk.
Anthropic IPO and market expectations
Anthropic recently updated its prospectus as it moves toward what the report describes as an expected $1.4 trillion IPO. At the same time the company’s valuation has been reported at $90.4 billion, indicating that initial optimism has already moderated.
The IPO is scheduled to be priced on Nov. 18 and begin trading the following day. Tore Opsahl, head of the Quantitative Solutions Advisory group at Nomura, warned that volatility around the offering "might mean a selloff of the AI theme around the IPO," suggesting that any wobble could spill over into related stocks and funds.
Why this matters to markets
Bowman’s warning matters because AI investments and the financing behind them have increased the financial system’s exposure to the sector. The cited $800 billion in AI-linked debt, together with off-balance-sheet commitments and interconnected financing arrangements, could magnify market reactions to negative developments.
If AI returns fall short of expectations, the effects could extend beyond Anthropic’s share price. A broader correction among AI-related securities and the lenders or funds backing them could ensue, which in turn could slow economic activity.
What to watch next
Market participants should monitor the IPO pricing and trading on the planned Nov. 18–19 timeline, as well as further commentary from the Federal Reserve and other regulators about risks in AI financing. These developments will help determine whether investor optimism toward the AI theme proves resilient or gives way to a more widespread market adjustment.
By Ellen DiMauro
