The United States and Iran have reached an agreement to ease tensions in the Middle East. At the same time, U.S. President Donald Trump has adopted a softer stance in the ongoing trade dispute with China.

As a result, global oil prices have begun to trend lower. Nevertheless, inflation concerns continue to linger. Economists believe a new catalyst has emerged in the form of massive investments in artificial intelligence (AI) development across the United States.

The fierce competition among major technology companies to dominate the AI race is expected to drive up prices across a wide range of goods and services, from consumer electronics such as smartphones and laptops to electricity rates.

Capital flowing into AI development has reached unprecedented levels. According to FactSet estimates, capital expenditures by the five hyperscalers—Alphabet, Amazon, Meta Platforms, Microsoft, and Oracle—are projected to total US$741 billion (Rp13.219 quadrillion) this year, representing an increase of nearly 75% from the previous year.

Where Is the Money Going?

According to Columbia University economist Stijn Van Nieuwerburgh, as quoted by The Wall Street Journal on Saturday (June 27, 2026), while public discussions often focus on AI's capabilities, building AI infrastructure is fundamentally a physical undertaking.

AI data centers require advanced computing equipment, sophisticated cooling systems to prevent overheating, extensive power and fiber-optic networks, and backup generators to ensure uninterrupted electricity supply.

Based on announced and planned developments, Van Nieuwerburgh estimates that AI infrastructure spending could reach approximately US$8 trillion (Rp142.586 quadrillion) by 2032. That figure is equivalent to roughly five times the total value of New York City's real estate market.

The growing demand for AI infrastructure is expected to push up prices for the goods and services needed to build it. Since many of these components are also used across other industries, higher costs are likely to spread throughout the broader economy.

Smartphone and Laptop Prices Could Rise Sharply

Memory and storage chips, for example, are essential components in products ranging from gaming consoles and smartphones to laptops and automobiles. Companies such as Nintendo, Microsoft, and Sony have already raised prices on several of their products.

Apple products are also expected to become more expensive. Apple CEO Tim Cook told The Wall Street Journal that the current surge in costs is unlike anything he has experienced in more than four decades in the industry.

At the same time, if AI proves to be as transformative as many economists anticipate, it could eventually help reduce inflation. Previous technological revolutions boosted worker productivity, allowing businesses to meet higher demand without continuously raising prices.

Kevin Warsh, who now serves as Chairman of the Federal Reserve, previously expressed the same view.

"AI will be a significant disinflationary force, boosting productivity and strengthening America's competitiveness," Warsh wrote in the Journal in November 2025.

His outlook on AI's impact on inflation is now expected to become one of the first major tests of his leadership at the Federal Reserve.

AI Transformation Could Fuel Inflation Through 2027

Although AI infrastructure can be deployed much faster than previous transformational technologies—such as railroads in the 19th century, electrification in the early 20th century, or telecommunications during the dot-com era—it still takes time before its economic benefits fully materialize.

Economists at UBS estimate that even under an accelerated timeline, AI will require several years before it begins easing inflation. In the short term, AI-driven demand is expected to place upward pressure on prices.

According to a National Association for Business Economics (NABE) survey released earlier this week, 81% of economists believe AI infrastructure development will contribute to higher inflation over the next year.

"During the initial phase of any major technological revolution, limited resources typically come under pressure, which tends to push prices higher," said Gregory Daco, Chief Economist at EY-Parthenon and President of NABE.

Signs of this trend are already visible in inflation data. The U.S. Department of Labor reported that consumer prices for software and computer accessories increased by approximately 15% year over year in May.

Further price increases may still lie ahead. Wholesale prices for electronic components and accessories climbed 27% from a year earlier, according to the Department of Labor.

Strategists at Evercore ISI argue that AI-related inflation differs fundamentally from the effects of tariffs or rising oil prices.

While tariffs and energy shocks generally create temporary price increases, AI investment represents a sustained demand shock that could persist for many years.

Chip Stocks Continue to Surge

Even so, much of the expected demand shock has yet to materialize. Federal Reserve Governor Lisa Cook noted in a speech last month that only a small portion of announced data center projects has actually moved into construction.

Meanwhile, OpenAI and Anthropic are expected to raise additional funding through upcoming initial public offerings (IPOs), potentially accelerating AI infrastructure investment even further.

This optimism has been reflected in the strong rally of semiconductor stocks, fueled by expectations of rapidly growing demand. Despite a sharp sell-off this week, the PHLX Semiconductor Index remains up roughly 150% over the past year.

Of course, data centers require much more than semiconductor chips. Numerous other materials and services used to build and operate these facilities are also widely utilized across the broader economy.

As a result, higher construction and operating costs for data centers may increase expenses for many businesses, which could ultimately pass those costs on to consumers through higher prices.

Electricity Costs Are Also Expected to Rise

In some cases, AI development is already contributing to higher labor costs. Wages for workers involved in data center construction have increased noticeably.

Average hourly earnings for electrical and wiring installation contractors rose 6.5% year over year in April 2026, compared with a 3.6% increase for the overall private-sector workforce.

As more data centers become operational, electricity demand is also climbing. Earlier this year, Goldman Sachs economists estimated that data centers would account for nearly half of U.S. electricity demand growth through 2030.

Consequently, they project consumer electricity prices will increase by approximately 6% annually this year and next year.

Even so, economists generally do not expect AI investment to trigger an inflation surge comparable to the one experienced when the U.S. economy reopened following the COVID-19 pandemic.

Consumer spending on products such as smartphones and gaming consoles represents only a relatively small share of annual household expenditures. Likewise, electricity accounts for only about 2.5% of total consumer spending in the United States, according to data from the U.S. Department of Labor.