The immense capital required for AI data centers is reshaping corporate finance. The majority of recent corporate bond issuance is funding this construction. To satisfy this huge appetite, major tech companies ("hyperscalers") are increasingly issuing billions in debt in foreign currencies like euros and yen.
Despite investors interpreting the June FOMC meeting as hawkish, Morgan Stanley's economists offer a contrarian view. They anticipate lower core inflation from specific factors like reversing travel costs, leading to their forecast that the Federal Reserve will keep rates on hold through 2026.
While investors fear "Chipflation" (rapidly rising memory prices) could end the AI investment boom, the reality is more nuanced. Morgan Stanley argues higher costs will primarily reprice and ration access to AI infrastructure, favoring large hyperscalers, rather than halting the overall cycle.