Just came across something interesting in the latest Bank of America survey that's worth paying attention to. Turns out institutional credit investors are way more concerned about an AI bubble than they are about AI making jobs obsolete.

The numbers tell the story pretty clearly. When BofA surveyed major credit investors about their top concerns right now, 23% flagged the threat of an AI bubble as their biggest worry. Meanwhile, only 10% said they were most concerned about AI-driven corporate obsolescence. That's a pretty stark difference, and it says a lot about where smart money thinks the real risk is.

Why should we care what credit investors think? These aren't retail traders or casual observers. We're talking about pension funds, hedge funds, and insurance companies that literally make their living analyzing corporate debt and figuring out whether companies can actually pay back what they borrow. They're watching how much money these AI companies are actually spending, and apparently, they're getting nervous.

Here's what's raising eyebrows: the four biggest AI players — Alphabet, Amazon, Meta, and Microsoft — are expected to drop about $700 billion combined on AI infrastructure and data centers in 2026 alone. That's massive capex spending. The survey also found that these hyperscalers are forecast to issue $285 billion in new debt this year, up roughly 36% from December's numbers. So the pattern is clear: they're borrowing more heavily to fund this AI buildout.

The underlying concern seems to be whether all this borrowed money actually generates real returns. If you're a credit investor looking at these debt issuances, you're probably asking yourself: is this investment justified, or are we in the middle of an AI hype cycle where valuations have gotten way ahead of fundamentals?

What's interesting is that software stocks have already taken a beating on fears that AI will disrupt or even replace them. The iShares Expanded Tech-Software Sector ETF is down over 20% year to date, which could be a massive overreaction if the credit investors are right about the AI bubble narrative being overblown. If AI capabilities aren't advancing as fast as the current market prices suggest, software companies might actually be a solid long-term play right now.

The bigger picture here is that this survey hints at growing skepticism among sophisticated investors about whether the current AI spending spree makes economic sense. It's not that AI won't matter — it clearly will — but there's real doubt about whether today's prices reflect realistic expectations. That's worth thinking about if you're building a portfolio right now.