AI brings credit pressure to TMT

March 11, 2026 (MLN): Credit risks linked to artificial intelligence (AI) are increasingly concentrated in the technology, media, and telecommunications (TMT) sectors, according to a new Fitch Ratings report.

The agency highlighted that software, media, and services are facing growing disruption risks, while overinvestment concerns remain largely confined to hyperscalers and select cloud providers.

The report explained that asset-light businesses, where value is driven by intangibles such as intellectual property, software, brands, and human capital, are particularly vulnerable to AI disruption.

The rise of "good enough" AI-powered alternatives could intensify competition, squeeze pricing, and put pressure on profit margins.

Companies with mission-critical functions, high switching costs, integration into regulatory frameworks, and proprietary data are expected to be more resilient.

Financial flexibility to invest in AI capabilities, absorb transition costs, and pursue strategic acquisitions will be key to protecting competitive advantages.Outside the TMT sector, Fitch noted that overinvestment risks are contained.

Aggregate capital expenditure (capex) for Fitch-rated North American corporates, excluding the four largest hyperscalers, is projected to rise only modestly to 7.4% of revenues in 2025-2026, compared with 6-7% over the past five years.

Free cash flow margins remain healthy, indicating that most companies are approaching AI-related investments cautiously, focusing on visible demand while maintaining balance sheet flexibility.

Fitch also emphasized that for most sectors in its 14-sector review, AI adoption is unlikely to be a near-term credit rating driver.

Implementation is expected to be gradual and efficiency-focused, with credit outcomes continuing to be dominated by traditional factors such as business conditions, financial structure, and liquidity.

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