Galaxy Securities says Fed rate hikes do not change the core logic that AI will
raise productivity. AI infrastructure build-out is boosting near-term demand for
chips, power and related inputs, but over the medium-to-long term AI should lift
total-factor productivity and expand supply capacity, producing structural
disinflationary pressure that can offset inflation. Global AI capex remains on
an upward trend and compute demand should continue to expand. Several Fed
officials have signaled AI may raise the neutral rate, implying that even if
nominal rates stay elevated the real policy rate could be relatively low. Galaxy
concludes the AI sector’s growth resilience should sustain development in a
higher-rate environment, and rate-driven valuation repricing may offer more
reasonable entry points for firms with genuine earnings support.
