US Treasury draft warns AI boom risks financial stability

A leaked draft report from the U.S. Treasury Department warns that the booming artificial intelligence sector poses a significant systemic risk to the economy, creating a stark contrast with the Trump administration's public optimism. The document, obtained by media outlets and reported on Monday, July 6, 2026, expresses concern that an AI market downturn could send shockwaves throughout the entire economic ecosystem.

Prepared by career Treasury analysts for top officials including Secretary Scott Bessent and Federal Reserve Chair Kevin Warsh, the draft report compares aspects of the current AI investment surge to the dotcom bubble of the late 1990s. It concludes that while a potential pop may not cause an immediate crash as severe as the dotcom bust, it would lead to companies cutting back, a loss of investor confidence, and slower economic growth. The analysts note that AI firms are more deeply entrenched in the U.S. economy than their dotcom predecessors, meaning a faltering industry would broadly impact stock markets, private credit, chip manufacturers, cloud providers, and power utilities.

The report states that AI investors are taking risks so significant that much of the...