Jennifer Lee, senior economist and managing director at BMO Capital Markets, argues that a cooling in artificial intelligence spending could ease inflationary pressures and give the Federal Reserve more room to maneuver. Heavy investment in data centers and advanced chips is driving demand for energy, labor, and capital, keeping interest rates elevated. After several disappointments for technology stocks, investors are questioning how long the sector can sustain spending at this pace, although Lee does not foresee a collapse in investment. A selloff in stocks such as Nvidia, AMD, Intel, Meta, and Alphabet could therefore ease inflation and Treasury yields, giving monetary policymakers more flexibility and increasingly tying monetary policy to the technology market.
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