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Galaxy Securities: Fed Rate Hikes Won't Alter AI's Long-Term Growth Logic; Industry Resilience Supports High-Rate Environment
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A research report by Galaxy Securities argues that the Federal Reserve's interest rate hikes will not change the fundamental long-term logic that the AI technology revolution enhances productivity. While AI infrastructure construction may temporarily increase demand for resources like chips and electricity, the report states that AI will ultimately boost total factor productivity and expand supply capacity, creating a structural deflationary effect that offsets inflationary pressures. The report notes that the long-term growth trend of global AI capital expenditure remains intact, and demand for computing power will continue to expand. It cites several Fed officials who believe AI will push up the neutral interest rate level, implying that even if nominal rates stay high, real policy rates may be relatively low, and the AI industry's resilience can sustain its development in a high-interest-rate environment. Therefore, the report concludes that the medium-to-long-term logic of the AI industry remains solid, and valuation adjustments caused by rate hikes provide a more reasonable starting point for companies with genuine earnings support.
Source report
Jin10 Data, September 21 — A research report from Galaxy Securities indicates that, from a long-term perspective, the Federal Reserve's interest rate hikes will not alter the fundamental logic that the AI technology revolution enhances productivity.
Key Insights from the Report
- Short-Term vs. Long-Term Dynamics: While AI infrastructure construction may drive up short-term demand for resources such as chips and electricity, over the long run, AI is expected to boost total factor productivity and expand supply capacity. This creates a structural deflationary effect that helps offset inflationary pressures.
- Capital Expenditure Trends: The long-term growth trajectory of global AI capital expenditure remains intact, and demand for computing power is projected to continue expanding.
- Neutral Interest Rate Outlook: Several Federal Reserve officials believe that AI will push up the neutral interest rate level. This implies that even if nominal rates remain high, real policy rates may be relatively low, and the resilience of the AI industry is sufficient to sustain its development in a high-interest-rate environment.
Conclusion
Over the medium to long term, the fundamental logic supporting the AI industry remains solid. Valuation adjustments triggered by rate hikes may actually provide companies with genuine earnings support, offering a more reasonable starting point for valuation.
Source
金十数据Neutral / independent
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Galaxy Securities: Fed rate hikes won’t alter AI’s long-term productivity logic