AI-driven inflation is fast becoming one of the most overlooked risks of 2026, even as markets celebrate another strong run in tech stocks. This comes as shares are high, confidence is strong, and investors remain excited about the AI tech.
Yet beneath that optimism sits a growing worry. The AI boom is expensive, energy-hungry, and increasingly tied to rising prices across the economy. Global stock markets enter 2026 riding momentum from last year, with US tech giants delivering much of the earnings growth, while Europe and Asia also touch record levels.
Bonds rally as inflation cools from earlier peaks and rate cuts arrive. Many investors assume the path ahead stays smooth. But some fund managers say that view ignores how much inflation pressure is quietly building.
Both companies and governments are investing into their economies and AI, forces that boost demand, resulting in higher prices.
Market expectations reshaped
Several investors are of the view that inflation will pick up again before the end of 2026. If that happens, central banks may stop cutting rates sooner than markets expect. Some may even hike again, and that would quickly drain cheap money from tech-heavy markets.
“You need a pin that pricks the bubble and it will probably come through tighter money,” said Trevor Greetham, head of multi-asset at Royal London Asset Management.
Greetham added that while he was holding on to big tech stocks for now, he would not be surprised to see inflation growing across the world by end of 2026.
Analysts have further alluded to the multi-trillion-dollar race by hyperscalers like Alphabet, Meta, Microsoft to develop new data centers, projects that consume energy.
“The costs are going up not down in our forecasts, because there’s inflation in chip costs and inflation in power costs.” Andrew Sheets, a Morgan Stanley strategist,
Sheets predicts that the US consumer price inflation will remain above the Federal Reserve’s 2% target until the end of next year as a result of heavy corporate AI investments.
AI-driven inflation forces investors to rethink risk
Some warning signs already appear, with a few large tech firms reporting higher spending and weaker margins. Others warn that chip prices and power bills will rise through late 2026. Investors react quickly when costs surprise on the upside.
Stocks may hold up longer, but not forever. If inflation returns, the price investors are willing to pay for future AI profits will fall. That repricing could come suddenly.
A clear example of rising AI costs appears in worker pay. According to Cryptopolitan, OpenAI now gives employees an average of about $1.5 million in stock compensation. That equals roughly 46% of its revenue. The article explains how fierce competition for AI talent is pushing wages sharply higher across Silicon Valley. These pay packages add to operating losses, dilute shareholders, and feed broader inflation through rising labour costs.
Banks now estimate AI data center spending could reach trillions of dollars by 2030. The speed of that build-out risks bottlenecks in chips, electricity, and skilled labour. When supply tightens, prices climb, feeding straight into inflation.
Consultants warn that rising costs could slow the AI rush itself, and if returns fall, investors may pull back.
“What keeps us awake at night is that inflation risk has resurfaced,” said Julius Bendikas, European head of economics and dynamic asset allocation at Mercer, which manages $683 billion of assets directly and advises institutions running a combined $16.2 trillion.
He is not yet betting on a stock market correction, but is edging out of debt markets that might get rattled by an inflation shock.
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