Investor concerns are mounting that the massive, energy-intensive expansion of artificial intelligence (AI) infrastructure is quietly fueling inflationary pressures, a risk that could force central banks to halt or reverse interest rate cuts and drain liquidity from tech-heavy markets. This warning comes even as global stock markets, led by US tech giants, continue to rally into 2026 on strong earnings and cooling inflation from prior peaks.
Fund managers and strategists point to the multi-trillion-dollar race by hyperscalers like Alphabet, Meta, and Microsoft to build new data centers as a primary driver. This surge in corporate AI investment is creating bottlenecks and increasing demand for chips, electricity, and skilled labor, pushing costs higher across the economy. "The costs are going up not down in our forecasts, because there's inflation in chip costs and inflation in power costs," said Andrew Sheets, a Morgan Stanley strategist. He predicts U.S. consumer price inflation will remain above the Federal Reserve's 2% target through the end of 2027 due to these heavy investments.
The inflationary impact is already visible in labor markets, with fierce competition for AI talent sharply driving up wages. For example, OpenAI now provides average stock compensation of about $1.5 million per employee, roughly 46% of its revenue. These rising operational costs contribute to broader inflation and could eventually reduce the future profit margins that tech stock valuations are built upon. "You need a pin that pricks the bubble and it will probably come through tighter money," warned Trevor Greetham of Royal London Asset Management.
Concurrently, investment in green and energy technology is poised to increase in 2026, driven by clearer regulations and lower borrowing costs. A significant focus is on companies that can meet the soaring energy demands of AI data centers, with U.S. data center energy use projected to jump 130% by 2030. This creates opportunities in renewable energy, grid technology, and nuclear power. Notably, nuclear fusion startups attracted about one-fifth of all climate venture funding in the first nine months of 2025, and a surprising $6 billion deal was announced between Trump Media & Technology Group and fusion startup TAE Technologies.
However, the investment landscape is shifting. While energy and grid tech attract capital, other sectors like alternative proteins are seeing a dramatic pullback, with venture funding for cell culture technology down approximately 90% in 2025. The overarching theme for 2026 is a move toward profitability and tangible solutions, especially those supporting the AI-driven energy transition, amid growing macroeconomic risks from AI itself.
