According to BlackRock Investment Institute, the artificial intelligence revolution will trigger a prolonged phase of scarcity before delivering widespread economic benefits. Ben Powell, Chief Investment Strategist for Asia Pacific and the Middle East at BlackRock Investment Institute, warned that demand for critical resources such as electricity, semiconductor chips, data infrastructure and capital is rising much faster than supply, creating structural bottlenecks that could reshape global markets for years. As reported by ET Now, Powell emphasized that AI should not be viewed purely as a software revolution, as running large AI models requires enormous computing power, massive data centres and reliable electricity supplies, all demanding substantial long-term investment.
The industry's biggest hurdle is no longer technological innovation but the physical infrastructure needed to support AI development. According to BlackRock's analysis, hundreds of billions and potentially trillions of dollars will need to be invested before AI can generate the productivity gains many economists expect. Powell highlighted growing shortages across the AI ecosystem, from advanced semiconductor manufacturing and memory chips to electricity generation, transmission networks and skilled labour. Until this infrastructure is built, these supply shortages are likely to keep inflation elevated, as reported by ET Now.
Powell announced the end of the 'everything bull market' era, stating that investors now face a world marked by geopolitical uncertainty, supply constraints, changing economic policies and persistent inflation. The old investment playbook no longer works, with active investing becoming increasingly important as markets grow more complex. According to BlackRock's assessment, successful investing will increasingly depend on selecting businesses capable of generating sustainable profits rather than simply benefiting from abundant liquidity. As reported by ET Now, investors can no longer rely on monetary policy alone to lift markets, with company earnings, valuations and business fundamentals becoming the primary drivers of investment performance.
Powell highlighted several long-term forces contributing to this shift, including shrinking workforces due to ageing populations and geopolitical tensions that have disrupted global trade. The rapid expansion of AI has added another layer of demand, particularly for specialised hardware and energy infrastructure. Together, these trends are creating persistent supply shortages that differ from temporary disruptions seen during previous economic cycles. Rather than expecting inflation to quickly return to historically low levels, BlackRock believes investors should prepare for an environment where prices remain structurally higher than they were during the last decade.
