The Physical Limits of Compute and Financial Risk Integration Across Seven Infrastructure Layers
Authors/Creators
- 1. GARCH Institute
- 2. Shenzhen University of Information Technology
Description
Artificial intelligence links seven infrastructure layers into a persistent, uneven equity-risk system. Using 33 firms, a fixed 28-stock comparison and strictly lagged factor adjustment through August 2026, return connectedness rises from 6.34% to 20.06% and downside connectedness from 5.27% to 21.02%. Both increases survive a six-test correction; the residual diversification ratio falls by 16.3%. A traded-factor extension through 23 October retains higher connectivity, with corrected evidence strongest for downside risk. Grid equipment dominates outward variance attribution; nuclear supply and gas remain peripheral. Five supplier–buyer power-agreement announcements and fourteen eligible tariff decisions establish observable contractual links without a uniform increase in residual dependence. Power agreements validate investment while reallocating price, volume, completion and exit exposures. Financial integration therefore spans industry boundaries, while physical links and equity covariance measure different objects. Risk management must assess the infrastructure system and its contractual risk bearers jointly.