TS Lombard analysts suggest that a collapse in the AI investment boom, combined with a mild recession, could lead to a $20 trillion decline in global equity markets. Economist Dario Perkins notes that market discussions have shifted from questioning the existence of an AI bubble to analyzing the potential timing and severity of its correction.
Recent market data highlights significant pressure on neocloud providers, which saw a 20% drop in value over five trading sessions. CoreWeave, a major operator in this space, is facing particular scrutiny. Its five-year credit default swaps reached between 1,100 and 1,194 basis points in mid-October 2026, indicating a 60% to 63% probability of default.
CoreWeave currently holds approximately $50 billion in debt. As of October 15, 2026, the company's unsecured bonds yielded nearly 15%, with prices falling below 80 cents on the dollar. Meanwhile, the company's equity value has declined by 15% to 25% recently.
The structural risk identified by TS Lombard stems from the fact that 85% of revenue within the AI ecosystem is derived from recycled capital expenditure among large technology firms. The firm warns that if external demand from businesses and consumers does not materialize, the industry could face a rapid slowdown in spending.
Despite these risks, Perkins does not anticipate a broad economic catastrophe. He suggests that any downturn resulting from an AI market correction would likely remain contained rather than triggering a systemic macroeconomic crisis.
