Global stock markets, riding high on AI euphoria at the start of 2026 may be disregarding one of the biggest threats that could spoil the party: a surge in inflation driven partly by the tech investment boom,
El.kz cites
Reuters.
U.S. stock indexes, where seven tech groups contributed half of all market earnings this year, made double-digit gains in 2025 to hit record highs as exuberance about AI and monetary easing also propelled European and Asian equities to record peaks.
Expectations for further rate cuts have buoyed bonds too, handing U.S. Treasury investors the
best annual performance for five years as inflation retreated, although it remains above the Federal Reserve's average 2% target.
For 2026, waves of government stimulus in the U.S., Europe and Japan as well as the AI boom are expected to refuel global growth.
This has money managers bracing for inflation to re-accelerate, prompting central banks to end their rate-cutting cycles, slamming the brakes on the easy money flow into AI-obsessed 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.
He said that while he was holding on to big tech stocks for now he would not be surprised to see inflation booming worldwide by the end of 2026.
Tighter money would reduce investors' appetite for speculative tech, raise funding costs for AI projects and reduce tech groups' profits and share prices, Greetham said.
The multi-trillion-dollar race by so-called hyperscalers like Microsoft, Meta and Alphabet to build new data centres was also an inflationary force, analysts said, because of the rate at which these projects are gobbling up
energy and
advanced chips.
"The costs are going up not down in our forecast, because there's inflation in chip costs and inflation in power costs," Morgan Stanley strategist Andrew Sheets said.
He said U.S. consumer price inflation would stay above the Federal Reserve's 2% target until the end of 2027 in part because of heavy corporate investment in AI.
J.P. Morgan head of cross-asset strategy Fabio Bassi said that an improving U.S. labour market, stimulus spending and rate cuts that have already happened would keep inflation above that target "regardless of the price of chips."
Aviva Investors said in its 2026 outlook that a key market risk would come from central banks ending their rate-cutting cycles or even starting to hike, as price pressures build up from AI investment and waves of government stimulus spending in Europe and Japan.