AI’s costly buildout complicates the Fed’s inflation fight

SoftBank CEO Masayoshi Son and OpenAI CEO Sam Altman attend an event to pitch AI for businesses in Tokyo, Japan Feb. 3, 2025. Kim Kyung-Hoon | ReutersSilicon Valley leaders from Elon Musk to OpenAI CEO Sam Altman have hyped the deflationary effects of the artificial intelligence boom. "Intelligence too cheap to meter is well within grasp," Altman wrote recently. Musk, the CEO of Tesla and SpaceX and the world's richest person, has argued that AI and robotics will create extreme abundance and drive down cost. SoftBank's Masayoshi Son said he expected a 40% drop in prices and that "unnecessarily hard work, sweating work, would no longer be needed."None of those dreams are close to being realized. Instead, AI is hitting a wall of corporate inertia as it spreads out into the economy — causing some near-term inflation and producing little evidence of a sustained productivity boom. Company adoption has proved slower than some of the boosters promised. Meanwhile, the tech industry's multi-trillion-dollar spending spree on data centers and AI infrastructure has snarled supply chains. Spending to build out AI is raising prices in sectors like electricity. Costs are piling up before the full...