The artificial intelligence (AI) boom is often described as the next wave of economic abundance, promising higher productivity, faster innovation and long-term growth. But BlackRock believes the transition will be far more challenging than many investors expect.
According to Ben Powell, Chief Investment Strategist for Asia Pacific and the Middle East at BlackRock Investment Institute, the AI revolution is likely to create a prolonged phase of scarcity before delivering widespread economic benefits. Speaking in an interview on BlackRock’s latest global investment outlook, Powell said 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.
The End of the ‘Everything Bull Market’
Powell argued that the investment environment that dominated the past decade and a half has fundamentally changed. For years, investors benefited from low inflation, historically low interest rates and ample liquidity, conditions that lifted almost every asset class.
That era, he said, has come to an end.
Instead of relying on broad market rallies, investors now face a world marked by geopolitical uncertainty, supply constraints, changing economic policies and persistent inflation. These shifts require a different investment strategy—one that focuses on identifying sectors and companies capable of outperforming rather than simply riding market momentum.
“The old investment playbook no longer works,” Powell suggested, adding that active investing is becoming increasingly important as markets grow more complex.
AI’s Biggest Challenge Isn’t Technology, It’s InfrastructureWhile AI continues to attract record investment worldwide, Powell believes the industry’s biggest hurdle is no longer technological innovation but the physical infrastructure needed to support it.
He pointed to growing shortages across the AI ecosystem, from advanced semiconductor manufacturing and memory chips to electricity generation, transmission networks and even skilled labour required to build and maintain these facilities.
According to Powell, AI should not be viewed purely as a software revolution. Running large AI models requires enormous computing power, massive data centres and reliable electricity supplies, all of which demand substantial long-term investment.
He said hundreds of billions and potentially trillions, of dollars will need to be invested before AI can generate the productivity gains many economists expect. Until that infrastructure is built, these supply shortages are likely to keep inflation elevated.
Scarcity, Not the Business Cycle, Is Driving Markets
BlackRock believes investors should pay closer attention to structural supply constraints rather than traditional economic cycles.
Powell highlighted several long-term forces contributing to this shift. Many developed economies are facing shrinking workforces due to ageing populations, reducing labour availability and increasing wage pressures. At the same time, geopolitical tensions have disrupted global trade, while tariffs and ongoing conflicts have made supply chains more expensive and less efficient.
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 the temporary disruptions seen during previous economic cycles.
Rather than expecting inflation to quickly return to historically low levels, Powell believes investors should prepare for an environment where prices remain structurally higher than they were during the last decade.
Investors Need to Focus on Fundamentals Again
Higher inflation also changes the role of central banks.
During the years of ultra-low interest rates, central banks often stepped in to support markets whenever economic growth weakened. Powell argued that today’s inflation environment limits that flexibility.
As a result, investors can no longer rely on monetary policy alone to lift markets. Instead, company earnings, valuations and business fundamentals will once again become the primary drivers of investment performance.
Powell said successful investing will increasingly depend on selecting businesses capable of generating sustainable profits rather than simply benefiting from abundant liquidity. This means analysing opportunities by geography, sector and individual company instead of adopting broad market exposure.
According to BlackRock, the current environment demands greater precision and discipline from investors than the one that prevailed over the previous decade.
