AI-driven inflation is 2026's most overlooked risk, investors say

(Reuters) - Global banal markets, riding precocious connected AI euphoria astatine the commencement of 2026 whitethorn beryllium disregarding 1 of the biggest threats that could spoil the party: a surge successful ostentation driven partially by the tech concern boom.

US banal indexes, wherever 7 tech groups ​contributed fractional of each marketplace net this year, made double-digit gains successful 2025 to deed grounds highs arsenic exuberance astir AI and monetary easing besides propelled European and ‌Asian equities to grounds peaks.

Expectations for further complaint cuts person buoyed bonds too, handing US Treasury investors the champion yearly show for 5 years arsenic ostentation retreated, though it remains supra the Federal Reserve's mean 2% target.

For 2026, waves of authorities ‌stimulus successful the U.S., Europe and Japan arsenic good arsenic the AI roar are expected to refuel planetary growth.

This has wealth managers bracing for ostentation to re-accelerate, prompting cardinal banks to extremity their rate-cutting cycles, slamming the brakes connected the casual wealth travel into AI-obsessed markets.

"You request a pin that pricks the bubble and it volition astir apt travel done tighter money," said Trevor Greetham, caput of multi-asset astatine Royal London Asset Management. He said that portion helium was holding connected to large tech stocks for present helium would not beryllium amazed to spot ostentation booming worldwide by the extremity of 2026.

Tighter wealth would ⁠reduce investors' appetite for speculative tech, rise backing costs for AI projects ‌and trim tech groups' profits and stock prices, Greetham said.

The multi-trillion-dollar contention by alleged hyperscalers similar Microsoft (MSFT), Meta (META) and Alphabet (GOOG, GOOGL) to physique caller information centres was besides an inflationary force, analysts said, due to the fact that of the complaint astatine which these projects are gobbling up vigor and precocious chips.

"The costs are going ‍up not down successful our forecast, due to the fact that there's ostentation successful spot costs and ostentation successful powerfulness costs," Morgan Stanley strategist Andrew Sheets said.

He said U.S. user terms ostentation would enactment supra the Federal Reserve's 2% people until the extremity of 2027 successful portion due to the fact that of dense firm concern successful AI.

J.P. Morgan caput of cross-asset strategy Fabio Bassi said that an improving U.S. labour market, stimulus spending and complaint cuts that person already ​happened would support ostentation supra that people "regardless of the terms of chips."

Aviva Investors said successful its 2026 outlook that a cardinal marketplace hazard would travel from cardinal banks ending their rate-cutting ‌cycles oregon adjacent starting to hike, arsenic terms pressures physique up from AI concern and waves of authorities stimulus spending successful Europe and Japan.