The Monetary Authority of Singapore (MAS) Managing Director Chia Der Jiun said Tuesday that he sees the sustainability of the artificial intelligence (AI) investment boom as one major uncertainty for financial markets and financial stability.

He said at the MAS Annual Report 2025/2026 Media Conference that global growth, investment and financial market performance have become highly dependent on projections of large and increasing investment in data centers and semiconductor chips continuing well into the future, and this is particularly so in the United States and semiconductor-exporting Asian economies.

According to him, AI-driven electronics exports account for more than 70 percent of Asia’s export growth year-to-date, up from 46 percent in 2024.

Meanwhile, AI-connected firms now account for around 40 percent of S&P 500 market capitalization and more than 30 percent of the MSCI EM Asia Index. They also dominate new financing raised in US capital markets, representing around half of investment-grade bond issuance, 38 percent of high-yield issuance, and 87 percent of new venture capital funding.

“The sustainability of AI investments is thus highly consequential for global growth and financial stability. While near-term investments are supported by committed orders and strong hyperscaler cashflows, there is greater uncertainty around the sustainability of these investments in the medium term,

“In the race for model advantage and to scale adoption, projected investments by hyperscalers and model builders have expanded beyond cashflows and commercial revenues. Large equity and debt financing will be needed in the years ahead,” he added.

He also highlighted that markets will increasingly be looking to commercial revenue growth to justify the financing risks, and the revenue growth will in turn depend on early signs of AI productivity gains at the firm level broadening across the economy and a deepening of transformative applications.

“The investment boom could be an extended one if supported by accelerating revenue growth and broadening productivity gains. But there are also clear risks on the path of AI investment monetization,” he noted.

These include the escalating costs of energy and chips, supply bottlenecks of raw materials, regulatory uncertainty, intense competition among model providers, including from lower-cost open-weight models, as well as how widely shared the benefits of productivity gains are.

“If the payoff of AI investments falls short of expectations over the medium term, hyperscalers will moderate the pace of investment and markets will reassess asset valuations,” he warned.

For him, the implications are significant if either outcome comes to pass.

“If we are in a long AI investment boom with significant and broad productivity gains, stronger and broader spillovers to income, demand and inflation could ensue,” he said.

He opined that the impact on inflation will be complex and depends on the interplay of higher demand for energy and inputs against the pace and extent of productivity gains. These will have consequences for central banks’ assessment of potential output and neutral interest rates.

“If on the other hand, there is a major retrenchment in AI investment, it could sharply weaken global growth through a fall in business investment and semiconductor demand and negative wealth effects,” he noted.

He sees financial stability risks could also materialize through equity, credit and loan markets’ exposures to unsustainable business models with deteriorating cashflows and weak credit terms in complex financing structures, and a sharp tightening of global financial conditions could result.

For him, the growth and resilience of the global economy was boosted by strong global AI investment.

A surge in investment in data centers, chips and computing infrastructure and semiconductor capacity has supported a sustained expansion in global production and trade in electronic products.

This has shifted growth outturns upwards, especially for economies that are deeply embedded in global technology supply chains.

“Looking ahead, growth of the Singapore economy should stay firm for the rest of the year. While the Middle East situation still poses risks to the outlook, global AI-related demand is likely to continue to provide a meaningful boost,” he said.

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