Ayako Yoshioka Warns AI Infrastructure Build-Out Drives Inflation

Ayako Yoshioka reports that the physical build-out of artificial intelligence infrastructure is creating inflationary impulses across the overall economy. This expansion, which includes semiconductors, data centers, and power components, is occurring on a larger scale than previous technology cycles, such as the internet expansion of the 1990s.

To fund this growth, hyperscalers and other technology companies are increasingly utilizing debt markets. Yoshioka expects investment-grade tech debt issuance to account for approximately 8% of all new issuance this year and into next year.

While some investors characterize the balance sheets of companies like Microsoft as pristine, Yoshioka maintains that sovereign markets remain the standard for risk-free rates. She noted that while a 5% yield on ten-year Treasuries attracts demand from endowments and insurance companies, it struggles to compete with the double-digit returns offered by equities.