When AI meets deflation, a 10% increase in global economic growth is no longer just a dream?

Last year, many economists predicted that AI was about to bubble, and that tariffs causing inflation would make people’s lives miserable. However, data shows that the US economy is soaring, and AI not only isn’t in a bubble but will also drive the global supply chain to take off together! Senior investor Vise discussed and analyzed on Pompliano’s podcast how artificial intelligence will reshape the global economic structure this year. He believes that mainstream economics has long overestimated the impact of tariffs on inflation. Theoretically, raising tariffs should directly push up consumer prices, but historical experience shows that the actual costs are often shared among manufacturers, exporters, logistics providers, and importers, with the final pass-through to consumers being much lower than expected. Prices do not increase proportionally. Vise thinks that most economists’ predictions are off because they overlook the deflationary forces and productivity leaps brought by AI. Interpreting inflation solely through tariffs is no longer sufficient to reflect reality. He further points out that if AI leads to exponential productivity gains, a 10% GDP growth is not a pipe dream. Currently, the global GDP is about $120 trillion, with labor wages accounting for as much as $60 trillion; if in the coming years AI gradually replaces some labor costs, it will profoundly change the economic structure. Regarding concerns that “automation might suppress consumption,” Vise bluntly states that global consumption power has long been highly concentrated among the wealthy, a phenomenon common across countries. Therefore, even if the labor structure shifts, overall consumption may not necessarily collapse; instead, supported by productivity improvements, it could enter a new phase of growth.

AI Promotes Corporate Efficiency and Maintains Profits

Vise emphasizes that mainstream forecasts overlook the structural deflation and productivity boosts brought by AI. As automation and intelligence accelerate, even if companies cannot fully pass on costs, they can maintain profits through efficiency gains. This is a key reason why current inflation has not spiraled out of control as expected.

Regarding economic growth prospects, Vise does not think high growth is a pipe dream. Recently, the Atlanta Fed’s real-time estimate of US GDP approached 6%, mainly due to a narrowing trade deficit. For a long time, the US trade deficit implied a capital account surplus and capital outflows, limiting market performance. Now, structural changes are beginning to occur, potentially providing new growth momentum.

From a longer-term perspective, Vise believes that if AI delivers exponential productivity increases, a 10% global GDP growth is not entirely impossible. The global GDP is about $120 trillion, with labor wages making up $60 trillion. If in the next few years AI gradually replaces some labor costs, it will significantly alter the economic structure. Some worry this will weaken consumption, but Vise points out that consumption has long been highly concentrated among the wealthiest groups, a structure that exists worldwide. Therefore, overall consumption may not necessarily collapse.

At the corporate level, AI’s impact is also highly differentiated. As programming and computing costs approach zero, companies anywhere in the world can develop software, which benefits large, low-margin enterprises, as AI makes it easier to significantly boost their profitability. Conversely, companies that already enjoy ultra-high profit margins or data center operators heavily reliant on computing power face rising costs and increased competition.

New Investment Logic in a High-Growth, Low-Inflation Environment

If the economy continues along the path of GDP growth, controlled inflation, and improving trade deficits, market structure and investment logic will inevitably undergo significant changes. For investors, the key is no longer just whether the index rises but how capital is redistributed within the market.

These changes are already beginning to emerge. Over the past two years, the stock market leaders have almost entirely been companies related to AI data centers, from chip giant NVIDIA to power equipment, transformers, and data center infrastructure suppliers, forming a highly concentrated rally. However, since the second half of last year, the market has gradually shifted: large-cap stocks and the “MAG 7” momentum have slowed, while small and mid-cap companies with lower concentration levels are starting to outperform.

Fundamentally, the market expects this year’s S&P 500 earnings to grow by about 15%, and the index itself could rise by approximately 15%. But the problem is that the internal structure of the index is overly concentrated: about 40% of companies would need to stay flat or decline by 5%, while the remaining 60% must rise over 20% to support the overall performance. This means future returns will come more from “diffused growth” rather than a few leading giants holding up the market.

AI Data Centers and the New Investment Focus on Energy and Rare Earths

AI development is gradually reaching the physical limits of “power and infrastructure.” Even if chip efficiency continues to improve and models evolve significantly every six months, the real bottleneck is no longer computing power itself but the power supply, transformers, switchgear, and key components inside data centers. Energy demand is almost unlimited, but the limiting factor for AI expansion is not oil or natural gas shortages but the insufficient infrastructure to convert and deliver energy to data centers.

This explains why recent natural gas and oil prices have not spiraled out of control, while prices of copper, silver, DRAM, and other “electrification essentials” have risen. These commodities account for a small part of data center costs; even if their prices double, it won’t change the economic viability of AI investments but are critical materials. For investors, this is not short-term speculation but a long-term allocation in response to electrification and AI infrastructure demands.

Energy and AI are also reshaping the geopolitical landscape. Germany’s past dependence on Russia for energy, due to energy policies, ultimately cost it dearly amid geopolitical conflicts. Meanwhile, the US and China are gradually becoming the dual cores of AI and energy order. Future global alliances may no longer revolve solely around ideology but around AI systems, energy security, data sovereignty, and military technology. Countries in the middle will be forced to make choices.

In this context, the strategic importance of rare earths and critical minerals is rapidly rising. Venezuela, Greenland, and other regions frequently appear in discussions, not just because of oil but because of their position in the supply chain of rare earths and critical resources. AI is not only transforming the economy but also reshaping military and global security architectures.

The world is in the early stages of a comprehensive upheaval. The core goal of AI is to boost productivity, not merely replace jobs. For investors, the key is not short-term data fluctuations but understanding how trade structures, technological advances, and geopolitical factors will jointly shape the next long-term economic cycle. In this context, the seemingly “impossible” high-growth scenario may be closer to reality than previously imagined.

The investment focus in the AI era has shifted from single tech giants to infrastructure, critical materials, and broader corporate profit diffusion. The actual effects of GDP growth may not yet be fully reflected in current statistics, but the structural shift in the market has already quietly begun.

This article “When AI Meets Deflation, a 10% Global Economic Growth Is No Longer Just a Dream” first appeared on Chain News ABMedia.