The rapid expansion of artificial intelligence is expected to fuel a new wave of inflation, with the United States likely to experience the greatest price pressures among major developed economies, according to new research from Goldman Sachs.
The investment bank said surging demand for AI infrastructure is creating supply bottlenecks across key industries, including semiconductors, memory chips, software and electricity, pushing up costs that are increasingly being passed on to businesses and consumers.
While economists widely expect AI to boost productivity and eventually reduce inflation over the long term, Goldman argues the technology is likely to have the opposite effect in the near term as companies race to build data centers, deploy AI software and secure scarce computing resources.
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Goldman Sachs estimates that artificial intelligence is currently adding about 20 basis points (0.20 percentage points) annually to the United States’ core Personal Consumption Expenditures (PCE) inflation, the Federal Reserve’s preferred measure of underlying inflation.
The bank expects that contribution to increase sharply over the coming months. By the end of the year, AI-related price pressures are projected to add approximately 50 basis points (0.50 percentage points) to core PCE inflation, according to Goldman economist Megan Peters.
That impact would be significantly larger than in other developed economies.
Canada, Australia, Europe, the United Kingdom, and Japan are each expected to experience only around 10 basis points of additional core inflation linked to AI.
“While not completely negligible, these effects are far below the 50bp peak we estimate for U.S. PCE, suggesting that for the most part AI-driven inflation is a U.S. story,” Peters wrote.
The disparity reflects the United States’ dominant role in developing, deploying, and consuming advanced AI technologies, as well as the concentration of global investment in U.S.-based hyperscale data centers.
Three Waves of AI-Driven Inflation
Goldman identifies three principal channels through which artificial intelligence is pushing prices higher: memory chips, software, and electricity. Each represents a critical input for AI systems, and all are experiencing strong demand that is outpacing available supply.
Memory Prices Surge Amid AI Demand
The first inflationary wave stems from the extraordinary increase in demand for advanced memory chips used in AI servers.
High-bandwidth memory (HBM), DDR5 memory modules, and other advanced memory products have become essential components for training and operating large AI models.
As cloud providers and technology companies expand AI infrastructure, competition for memory has intensified. According to computer hardware tracking platform Pangoly, the average price of an 8GB DDR5 memory module reached approximately $148 during the last week, more than four times higher than the $35 recorded during the same period last year.
The sharp increase underlines persistent supply shortages across the memory industry.
SK Hynix, one of the world’s largest memory manufacturers, recently warned that demand is expected to exceed production capacity until at least 2030 and forecast that 2027 could become the industry’s worst-ever year for supply shortages.
Goldman noted that memory inflation has a greater impact on U.S. inflation because software and computer accessories account for a larger share of consumer spending than in most other developed economies.
Approximately 1% of U.S. core PCE inflation is linked to software and accessories, compared with less than 0.5% in many peer economies.
Software Becoming More Expensive
The second inflationary channel involves software pricing. Technology companies are increasingly embedding AI features into existing software products and charging higher subscription fees in return.
One prominent example is Microsoft’s decision to increase prices for its Microsoft 365 productivity suite after integrating its AI assistant, Copilot.
Similar pricing strategies are emerging across enterprise software, cybersecurity, design applications and productivity tools as software vendors seek to recover the substantial costs associated with developing and operating frontier AI models.
Goldman expects software inflation in the United States to accelerate further, forecasting that prices for software and related accessories could rise by as much as 30% year over year before the end of 2026.
Because software spending represents a larger share of U.S. consumer expenditures than in most other advanced economies, American households and businesses are expected to bear a disproportionate share of these increases.
Electricity Demand Creates New Bottleneck
The third source of inflation stems from energy.
Artificial intelligence requires enormous computing power, and modern AI data centers consume vast quantities of electricity to operate servers and cooling systems around the clock.
As AI infrastructure expands, electricity demand is rising rapidly.
According to Goldman Sachs, data centers are expected to account for approximately 11% of total U.S. electricity demand by the end of the decade, nearly double the current level of around 6%. That surge is placing additional strain on electricity grids already facing growing demand from electrification, manufacturing, and population growth.
Data from the U.S. Bureau of Labor Statistics show that the average residential electricity price reached approximately $0.19 per kilowatt-hour in May, representing an increase of about 27% since May 2022.
Higher electricity costs affect consumers directly through utility bills while also increasing operating expenses for businesses, potentially feeding through to broader consumer prices.
AI Infrastructure Amplifies Commodity Demand
The inflationary effects extend beyond electricity.
Building AI infrastructure requires significant quantities of semiconductors, advanced networking equipment, cooling systems, steel, copper, and specialized construction materials.
Data centers also require large volumes of land, power transmission equipment, and skilled labor. These investments have contributed to rising costs across several industrial supply chains. At the same time, energy markets have experienced additional volatility following geopolitical tensions in the Middle East.
Although crude oil prices have retreated from recent highs, West Texas Intermediate crude remains roughly 25% higher year to date, reflecting continued concerns over global energy supplies. Higher fuel prices further increase transportation, manufacturing, and electricity costs throughout the economy.
Despite warnings of near-term inflationary pressures, Goldman Sachs continues to believe artificial intelligence will eventually reduce inflation by improving productivity. Historically, technological breakthroughs have lowered production costs, increased efficiency, and expanded economic output over time.
AI has the potential to automate repetitive tasks, improve decision-making, accelerate research, and increase labor productivity across numerous industries.
Those gains could ultimately offset today’s higher infrastructure and computing costs. However, Goldman cautioned that the disinflationary effects may emerge more slowly than many investors currently expect.
In previous research, the bank argued that AI is likely to prove less disinflationary than earlier technological revolutions, including the widespread adoption of the internet during the 1990s.
The difference lies in AI’s exceptionally high infrastructure requirements. Unlike earlier digital technologies, frontier AI depends on enormous investments in chips, memory, networking equipment, data centers and electricity generation, all of which remain constrained by limited supply.
Implications for Policymakers
Goldman’s findings present an additional challenge for central banks, particularly the Federal Reserve. If AI continues adding to inflation while simultaneously boosting economic growth and productivity, policymakers may find it more difficult to determine the appropriate pace of interest-rate adjustments.
The report also reinforces the idea that the AI boom is influencing not only technology stocks but also broader macroeconomic conditions. Rather than acting solely as a driver of innovation, artificial intelligence is increasingly reshaping supply chains, commodity markets, energy demand and inflation dynamics. Those make it a growing factor in monetary policy, corporate pricing strategies, and global economic forecasts.