WSJ warns AI spending boom could put global markets at risk

Companies are entering a "danger zone" as investment in artificial intelligence continues to surge, The Wall Street Journal warns.

According to estimates from consulting firm McKinsey, global spending on data center infrastructure could reach $7 trillion by 2030. If the productivity gains from AI fail to justify that level of investment, the consequences could extend well beyond the technology sector and put broader financial markets at risk, the WSJ reports.

For now, declines in AI-related stocks have largely been offset by gains elsewhere in the market. The newspaper warns, however, that a sufficiently large correction in the AI sector could eventually drag down the broader market.

The WSJ points to South Korea's memory chip market as an example of how quickly concentrated exposure can spread through an entire stock market. In June, shares of Samsung and SK Hynix, two of the world's largest memory chip manufacturers, fell by more than 12%, helping push South Korea's benchmark Kospi index down 10% and triggering an automatic 20-minute trading halt. Together, the two companies account for roughly half of the index's total market capitalization.