Market Views: How should investors assess the impact of massive AI infrastructure spending?

Spending on artificial intelligence (AI) and related infrastructure is projected to approach $1 trillion globally in 2026, and the resulting surge in demand for data centres, semiconductors, electricity and skilled labour could add to inflationary pressures.

 

This poses a dilemma for central bankers. As many large technology companies financing AI investment are relatively less sensitive to higher interest rates, tighter monetary policy may prove to be a blunt instrument. 

 

While it could cool the broader economy, it may disproportionately affect non-AI sectors and interest-rate-sensitive borrowers while doing little to curb AI-related investment.

 

Against this backdrop, AsianInvestor asked fund managers to share their views on the extent to which AI could keep inflation elevated and how this might impact monetary policy trajectory.