AI’s productivity promise

AI will gradually raise productivity and reduce inflation over the medium term, while its investment needs create inflationary pressure and supply constraints in the near term.

• Pictet expects US real GDP growth over the next decade to be 0.4 percentage points higher, while the euro area should receive a smaller uplift because adoption rates are roughly half the US level on most enterprise surveys.
• AI investment is deepening capital intensity through spending on chips, cooling, power systems, data infrastructure and software, which could partly offset demographic pressure in ageing economies.
• Labour effects have so far appeared mainly through slower hiring in exposed roles: openings for routine, automation-prone jobs fell 13% after ChatGPT, while demand for analytical, technical and creative jobs rose 20%.
• US data-centre expansion is raising prices for electricity, memory chips, transformers and construction materials, with Pictet estimating a 0.3 percentage-point contribution to US core PCE inflation.
• Data centres currently account for 3% of US electricity demand, with that share projected to reach 8% by 2030, making power generation, grid capacity and compute supply binding constraints.

Takeaway: Investors should expect a slow productivity payoff, near-term pressure on energy and technology inputs, and uneven regional gains shaped by AI adoption and energy availability; monetary policy will also face measurement problems and uncertainty over the neutral rate.