AI’s $800B Build-Out Keeps Fed on Hold, Weighs on Bitcoin

Goldman Sachs projects roughly $800 billion in AI-related capital spending in 2026. Federal Reserve officials say that surge is adding to price pressures and lowering the odds of near-term rate cuts. Traders and investors have adjusted positions in response, and Bitcoin has fallen alongside large outflows from crypto exchange-traded funds.

Goldman describes the spending as a broad wave across servers, semiconductors, memory, power infrastructure, data centers, software and research. A firm that tracks the largest cloud providers estimates their combined 2026 outlay near $830 billion, up about 79% year over year. Microsoft has attributed roughly $25 billion of its $190 billion budget to higher prices for memory and components rather than added capacity.

The spending has large physical requirements: land, steel, transformers, copper wiring, gigawatts of generation capacity, industrial-scale cooling and specialized construction labor. Goldman’s longer-run model projects annual AI capital expenditure climbing from about $765 billion this year toward $1.6 trillion by 2031, and the bank identifies power limitations as a key constraint on build pace.

Fed officials point to concrete signs of price pressure linked to the investment boom. Electricity and water costs have each risen about 5% over the past year, and prices for chips, high-tech equipment and software have increased. Wages for specialty construction trades have risen as well. Fed Chair Jerome Powell has acknowledged that construction activity for data centers and related infrastructure is raising costs for goods and services that go into building those projects. Governor Lisa Cook has warned that heightened investment demand from AI could add another layer of upward pressure on prices and noted that companies have announced more than $1.5 trillion in data-center plans, only a small share of which is complete.

Markets have moved quickly to price a lower chance of easing. Futures and prediction markets showed the probability of a hold at the mid-June Fed meeting above 93% in early June. That meeting will be the first chaired by Kevin Warsh after he replaced Powell. Crypto investors who had been positioned for cooling inflation and subsequent rate cuts began unwinding those bets. Bitcoin traded near $63,600 by June 4 after briefly slipping below $62,000, and Bitcoin ETFs recorded an 11-session outflow streak totaling about $3.45 billion, the longest continuous redemptions since those funds launched. Much of the capital exiting crypto moved into AI and semiconductor equities.

Analysts note a timing gap between immediate input-demand effects and later productivity gains. Warsh has expressed a view that AI will be structurally disinflationary and raise productivity over time. Governor Michael Barr has said he does not expect the AI build-out to be a reason to lower policy rates.

At the state level, some lawmakers have moved to slow large data-center development after residents reported higher utility bills. Proponents of AI investment continue to forecast that, over a multi-year horizon, automation and improved technology could lower costs and raise output per worker, while current spending patterns are influencing near-term price data and investor expectations across equity and crypto markets.