The AI boom is reshaping financial markets, driving valuations to record highs — but also creating new layers of systemic risk, warned top executives from Lazard and Citadel at the Reuters Momentum AI 2026 conference.
Lazard MD Matthew Danzig said AI is now the “number one topic” among investors and CEOs, pushing companies to acquire AI tech and proprietary datasets they can’t build internally.
“Every potential target is figuring out their AI angle.”
Valuations, he added, are being bid up as markets “pay for the future,” not fundamentals.
Nvidia’s surge masks deeper vulnerabilities
The industry needs $7 trillion by 2030 just for data centers (McKinsey). Debt levels are rising even though revenues aren’t keeping pace.
Still, investors shrugged off risks:
- Nvidia rose 5%+ in premarket trading Thursday after record quarterly revenue and 65% YoY net income growth, boosting its valuation to $4.5 trillion.
Citadel CRO Joanna Welsh warned that modern markets amplify shocks:
“Volatility spikes hit harder, fade faster, repeat more often.”
Risks are “starting to converge”
Welsh highlighted structural cracks forming across credit markets:
- Companies issuing 30–40 year IG bonds on assets with 4-year depreciation cycles, creating severe mismatch risk.
- A surge in zero-coupon convertible bonds, especially among lower-rated tech firms — a pattern seen in 2001 and 2021, both pre-crisis periods.
- Heavy flows into illiquid private credit, stacking more risk into portfolios.
Her warning:
“You can see how some portfolios… where a brush fire could be pretty healthy.”
As AI pushes valuations, leverage, and long-dated debt higher, investors may be underpricing the converging risks beneath the boom.