State Street's 2026 'grey swan' warning: AI 'fails to scale'

• AI fails to scale: Geopolitical tensions, manufacturing disruptions, power grid limits, and regulatory backlash could hinder AI growth, impacting semiconductor makers, data centers, and AI platforms.
• Bond Shock: Rising fiscal debt and heavy bond supplies could lead to a 'buyer strike' in developed sovereign markets, with France identified as a potential trigger due to high deficits and low growth.
• Oil Towards $100: Geopolitical disruptions, rerouting of oil flows, a material shift in Indian/Chinese demand, or increased AI power consumption could drive oil prices higher.
• China Goes Shopping: A positive grey swan where Beijing implements demand-side stimulus, allows RMB appreciation, and fosters a unified national market, boosting domestic and regional economies.

State Street's 2026 'Six Grey Swans' report identifies low-probability but high-impact risks for global markets. Key concerns include AI failing to scale due to hardware, energy, and regulatory constraints, a potential sovereign bond shock, and oil prices rocketing towards $100. A positive outlier scenario involves China pivoting to consumption-driven growth.