Enormous spending on artificial intelligence and the global energy transition are likely to cause inflationary pressures for decades to come, according to the chief executive of global infrastructure money manager IFM Investors.
“Inflation is an issue that investors should be a little more worried about, not just because of the spike that we’ve had in energy prices,” David Neal said in a Bloomberg TV interview on the sidelines of the Asia Pacific Financial and Innovation Symposium in Melbourne on Thursday.
While the recent surge in energy prices was a “wake up call,” Neal said there were also other structural pressures at play. There is “the enormous amount of capital that’s getting drawn into things like AI and the energy transition and other things,” he said. “And that is an inflationary pulse in itself, which will go on for decades.”
The A$264 billion ($183 billion) investment manager is owned by more than a dozen Australian pension funds — including AustralianSuper, the nation’s largest — along with UK pension fund Nest. About half of its portfolio is invested in infrastructure, including data centers in the US and Switzerland.
Four of the biggest US technology companies together have forecast capital expenditures that will reach about $650 billion in 2026 — money that is earmarked for new data centers and all the gear housed within them. The spending is planned by Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp., who are all looking for the edge in the still-nascent market for AI tools.
Neal cited “governments running fiscal deficits” as another pressure point.
“There’s a generally populous leaning, there’s a desire to want to spend, perhaps a bit of pressure on central banks not to raise rates too much,” he said. “All of these things create an environment which was already there, and now of course we’ve got this sort of energy price spike on top of that.”
Written by: Haidi Lun and Amy Bainbridge — With assistance from Andy Clarke @Bloomberg
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