Goldman Sachs says Americans may pay for the AI boom - Yahoo Finance Singapore

It's safe to say that inflation in the U.S. this year felt a lot like a game of whack-a-mole. Just as one pressure point starts to ease, another pops up somewhere else.

The turnaround many had hoped for never arrived. Instead, the Fed's preferred inflation gauge, PCE, rose to 4.1% in May from 2.9% in February, according to CBS News, while core PCE remained stubbornly above the Fed's target.

However, the market's primary catalyst, artificial intelligence, was supposed to swoop in and save the day like Superman.

Many, especially those reading Nvidia reports like gospel, expected the AI boom to make the economy faster, smarter, and cheaper.

Instead, according to a Business Insider report, Goldman Sachs warns it may first show up as another inflation shock, with Americans helping pay the bill through pricier software, power, and tech hardware.

Why Goldman Sachs sees an AI inflation problem for Americans

Goldman Sachs warns that the relentless AI buildout will come at a much higher cost to Americans in terms of inflation.

What the AI buildout has done is stoke demand for memory chips, software, and electricity, among other things, amid supply constraints.

In Goldman's view, the pressure is showing up in the Fed's preferred inflation gauge.

Megan Peters, an economist at the bank, estimates AI is lifting U.S. core PCE inflation by about 20 basis points a year. By year-end, that drag could more than double, with the boost to core PCE reaching 50 basis points.

The impact is far greater than the likely effect in Canada, Australia, Europe, the U.K., and Japan, where Goldman sees an average 10-basis-point increase.

"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 pressure stems from three major factors: soaring memory and software prices, and rising electricity demand.

How memory-chip prices are feeding the inflation warning

The first pressure point is memory, something iPhone fans are probably tired of hearing about, as are video gaming fans like me.

"Unfortunately, price increases are unavoidable," CEO Tim Cook said in an exclusive Wall Street Journal interview published on June 17, 2026.

More AI:

Goldman Sachs concurs with Cook that the tremendous demand for AI hardware is driving up the cost of key components, which flow into consumer technology, business software, and broader digital services.