Massive global investments in artificial intelligence could face significant challenges as rising energy costs linked to the Middle East crisis weigh on growth prospects, according to analysts.
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Melissa Otto, head of research at S&P Global Visible Alpha, warned that escalating oil prices may force technology companies to reconsider their ambitious spending plans on AI infrastructure.
Prior to the outbreak of the Iran war, major tech firms including Microsoft, Amazon, Alphabet, and Meta had planned to invest approximately $635 billion in 2026 on data centres, semiconductors, and other AI-related infrastructure. This marks a sharp increase from $383 billion in the previous year and just $80 billion in 2019.
While companies have not yet announced any reductions in capital expenditure, Otto cautioned that persistently high energy costs could lead to revisions in the coming quarters, potentially triggering a broader correction in global equity markets.
She noted that if rising oil prices are not adequately reflected in corporate earnings, it could act as a catalyst for market downturns.
The rapid expansion of AI has been a key driver behind record highs in global stock indices, but momentum has slowed amid geopolitical uncertainty. Analysts highlight that AI infrastructure, particularly data centres, requires vast amounts of electricity, making the sector highly sensitive to fluctuations in energy prices.
Concerns over energy supply were also raised at the CERAWeek conference held in Houston, where industry executives warned that supply risks may not yet be fully reflected in current prices.
Experts caution that a sharp rise in energy costs could have widespread economic consequences, impacting both consumers and businesses while raising broader questions about global growth.
