The Financial Stability Board (FSB) has issued a warning regarding the private credit industry's significant role in financing the artificial intelligence (AI) boom, suggesting that a sharp correction in asset valuations could lead to substantial losses for investors. The FSB's report indicates that the healthcare, services, and tech sectors, particularly AI firms, have become the largest borrowers of private credit, with AI companies accounting for over one-third of private credit deals in 2025, a notable increase from 17% over the previous five years. The report raises concerns that this focus on specific sectors may expose private credit funds to unique risks, particularly if there is a significant shortfall in electricity supply, which is crucial for the operation of data centers. Such an event could delay or cancel projects, leading to credit losses. Furthermore, the FSB noted that private credit borrowers typically have lower credit scores and higher debts compared to those seeking loans from traditional banks. This has raised alarms as traditional banks become increasingly entangled in the private credit sector, often lending to firms that also borrow from private credit sources. The report cites the recent collapses of two private credit-backed automotive companies in the U.S., which faced fraud allegations, emphasizing the need for better risk assessment in private credit lending.