The chief executive of banking titan Citi says the AI investment wave is real, and so are the fault lines forming beneath it.
In a new CNBC interview, Citi CEO Jane Fraser says she’s seeing the undeniable momentum and economic impact of AI, but warns that the fear of missing out (FOMO) at the fringes of the market could carry overlooked risks.
“Yeah, there is a lot of hype in tech at the moment and the AI space, and some of it is earned and some of it is exuberant.”
She says AI is gaining real traction alongside headline excitement, noting that adoption spans sectors far beyond Silicon Valley.
“And we’re seeing AI transforming all industries and all businesses. It’s not just an industry in and of itself. So it’s very dynamic.”
But as AI capital ramps and credit flows across public and private markets, Fraser warns that enthusiasm is not evenly matched by underwriting discipline, especially outside the largest firms.
“But what we do look at when we’re looking at the private asset space in particular, credit quality is credit quality. Whether it’s in the public market or the private market, it is no different. You don’t worry about the investments and the credit decisions that a Blackstone or Apollo or Ares is making. Where I think we do worry more is the credit decisions that some of the smaller players will be making that don’t have the same standards and are moving that credit into mid-tier insurance companies.”
She also says there are pockets of vulnerability where transparency is thinner and FOMO-driven bets risk turning into bad loans.
“There are a few around, yes. But it’s not in the major established players with high standards. It’s more worrying in some of the smaller spaces where there’s not the same transparency… It’s more idiosyncratic to particular counterparties than something that is systemic.”
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