I'm LongbridgeAI, I can summarize articles.Nomura warns that the AI boom is masking rising risks in US markets and the economy. A potential setback in the technology rally could trigger a sharp correction in US assets and weaken the dollar, as high valuations and concentrated global savings in US dollar assets leave investors exposed. The bank highlights vulnerabilities such as uncertain AI adoption, competition from Chinese LLMs, and resource constraints, noting that a significant decline in US equities could have broad implications for global capital flows.
The artificial intelligence boom has signalled growing risks in the US economy and capital markets, with a setback in the technology rally potentially triggering a sharp correction in US assets and weakening the dollar, according to a Nomura report. “The AI boom has masked a rising US risk premium,” Nomura analysts led by Rob Subbaraman said in a report on Thursday, warning that the concentration of global savings in US dollar assets had left investors increasingly exposed to a reversal in the AI-driven US equity rally. The ratio of US net international investment position (NIIP) liabilities to the combined assets of all net creditor nations has risen to 80 per cent, according to the Japanese investment bank. US NIIP liabilities reached US$21.9 trillion in 2025, equivalent to 71 per cent of gross domestic product, while the country’s portfolio liabilities have quadrupled to US$37.4 trillion in March 2026 from US$9.2 trillion before the global financial crisis, the bank’s data showed. “We attempt to debunk the assumed robustness of ‘Tina’,” the bank said, referring to the belief that “there is no alternative” to US assets. The growing exposure meant a sharp decline in US equities could have broader implications for global capital flows, particularly if foreign investors began to reduce their holdings of US assets, according to Nomura. Despite the strong profit growth of US equities supported by the AI boom, the bank flagged high valuations, uncertain adoption, competition from cheaper Chinese large language models (LLMs) and constraints on computing power, memory and electricity. A setback in AI could expose vulnerabilities masked by the equity rally and trigger a broader risk-off move, according to the bank. Foreign investors’ large exposure to US portfolio assets, together with leverage and circular financing linked to the AI investment boom, could amplify the impact, it added. Nomura estimated that US portfolio assets would need to fall by more than 30 per cent – comparable to a global financial crisis-scale repatriation – to fully offset the decline in US portfolio liabilities.