For now, the AI investment boom is papering over the weaker U.S. job market and softer consumer demand, says Fitch Ratings.
In a new report, the rating agency said the U.S. credit landscape is being supported by an accelerating investment surge, driven by enthusiasm for AI.
“Capital spending by the four main hyperscalers alone is expected to increase by more than 50% [year-over-year] to around US$370 billion in 2025, lifting revenues in related sectors such as technology hardware, power utilities and select industrial equipment suppliers,” Fitch said.
Beyond these firms, the rise of AI spending, and the related increase in the demand for energy, is extending the current cycle in corporate capital expenditure, it said.
“For now, these investments are supported by healthy free cash flow and has not yet translated into higher aggregate corporate leverage,” the report noted.
This increase in fixed investment is offsetting weaker household demand, Fitch said, adding that U.S. consumer spending slowed in the first half of 2025, entering the second half on “weaker footing.”
“There have been recent upward revisions in economic data and stability in monthly consumer spending driven by high net-worth households, but visibility is limited because of the government shutdown,” the report noted.
Against this backdrop, Fitch also said that “pockets of stress have emerged in credit markets,” with larger-than-expected losses being recently reported by several regional banks, amid a handful of high-profile bankruptcies that “fuelled market concerns around risk management and underwriting standards, especially in areas of rapid growth.”
At the same time, a weaker job market “should result in another 25 [basis point] policy rate cut by the Federal Reserve in 2025 and three more in 2026,” Fitch said.
Additionally, it noted that, “Policy uncertainty remains elevated amid an abrupt re-escalation of U.S.-China trade tensions.”