Artificial intelligence remained the most widely cited financial stability concern in the Federal Reserve's semiannual report, with 87% of surveyed contacts, or nearly 90% when rounded, identifying elevated equity valuations and complex AI-related financing as systemic risks. The report, which used data through Oct. 28, said valuations across most markets remained near the upper end of historical ranges, although investor enthusiasm was tempered by concerns about corporate capital spending and additional debt. Advanced-computing-related debt exceeded $680 billion by October 2026, five times the amount issued during all of 2023 and nearly one-third of nonfinancial investment-grade corporate issuance. The Fed warned that an earnings downturn could depress asset prices, tighten credit and pressure highly leveraged companies and vulnerable households. Borrowing by data-center companies has risen rapidly, while private-credit loan defaults have climbed since May to the upper end of their historical range. Banks remained sound and resilient, but their exposure to nonbank financial institutions surpassed $2.8 trillion in the second quarter of 2026. Hedge-fund leverage reached its highest level since 2013, while household debt and mortgage delinquencies remained relatively low. Respondents ranked a correction in AI-related assets, higher long-term interest rates and cyberattacks among other major risks.