AI’s Physical Buildout Is Fueling a New Inflation Regime

MFS Investment Management /

21-05-2026

MFS argues investors are underestimating the physical and inflationary consequences of the AI boom, which increasingly depends on scarce infrastructure, energy, labor, and industrial capacity.

AI may ultimately prove deflationary, but its near-term deployment requires enormous investment in data centers, semiconductors, transmission grids, cooling systems, and raw materials.
Years of underinvestment have left the global economy structurally constrained, contributing to persistent inflation and higher interest rates.
The report argues the investment regime has shifted away from financial engineering toward scarcity, reinvestment, resilience, and pricing power.
With equity risk premiums near multi-decade lows, MFS sees stock selection becoming increasingly important as margin pressure separates winners from losers.

The central question, according to MFS, is no longer whether AI changes the economy — but which companies can absorb the costs of building it.

Artificial intelligence