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

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.