Skip to main content

Location & language

Select Region Select Language

Asset Management: Monthly Macro Insights - September 2026

Published date

The AI Paradox: A Growth Engine with Rising Vulnerabilities

Economic growth has moderated, but fears of a synchronized global downturn have repeatedly failed to materialize despite successive shocks, from tariffs to the conflict in the Middle East. This resilience has been supported largely by investment spending related to artificial intelligence (AI), even as financial vulnerabilities have increased.

 

It’s the AI, stupid

The world is currently experiencing one of the largest technology-driven investment cycles in history. AI sits at the centre of this transformation, and its significance extends far beyond technological innovation. Its deployment requires enormous investment, and has become a powerful catalyst for capital expenditure across a wide range of industries.

The key question is whether these investments can translate rapidly into meaningful productivity gains. Not only does the magnitude of such gains remain highly uncertain, but economic history also suggests that transformative technologies often require years of complementary investment and organisational change before their benefits are fully realised.

Trade war’s financial ramifications

Alongside the AI investment boom, the global economy is becoming increasingly fragmented. Recent tensions with some of America's closest trading partners illustrate the risks associated with weakening these relationships, and the financial implications may ultimately be more important than the direct effects on trade.

Higher interest rates amid persistent inflation

Meanwhile, the inflation outlook remains challenging. Accordingly, long-term interest rates have risen to their highest levels in more than fifteen years. In addition, widening fiscal deficits are increasing government borrowing needs, while the AI boom is adding further upward pressure as massive financing requirements boost demand for long-term capital.

Overall, the AI boom presents two sides of the same coin. On the one hand, it has the potential to deliver substantial productivity gains, supporting stronger long-term growth and higher living standards. On the other hand, it is fuelling inflationary pressures and pushing long-term interest rates higher, thereby increasing financial vulnerabilities, particularly if expectations regarding future productivity gains and capital spending ultimately prove overly optimistic.

 

Read the Monthly Macro Insights

by Marc-Antoine Collard, Chief Economist and Head of Economic Research

Read more articles

Rothschild & Co’s Swiss Wealth Management business wins ‘Best Private Bank for Succession Planning in Switzerland’ at Global Private Banking Awards 2026

Rothschild & Co Wealth Management Switzerland has been recognised at the renowned Global Private Banking Awards 2026, as ‘Best Private Bank for Succession Planning in Switzerland’.

Insights Issue 18: Wealth in motion

As wealth becomes increasingly global, investors are spreading their lives, assets and opportunities across borders. Explore how a more connected world is reshaping the way capital is managed and grown.

 The Midterms

A Democratic sweep may increase political gridlock, but history suggests limited market impact, with resilient US growth, strong corporate profitability and consumers remaining more important drivers for investors.

 A quiet budget that may still change the landscape

The 2026 Budget brought limited headline change but potentially significant long-term implications, particularly for business owners, property investors and savers, through higher tax rates, new Founders Relief and company reforms.

 Research Matters by Rothschild & Co Redburn

How much AI infrastructure does the world need - and how is it going to be funded? Rothschild & Co Redburn's Global Head of Technology Alex Haissl joins Chief Strategist George Karamanos to explore the scale of the data centre buildout, the financing structures underpinning it and the prospects for sustainable returns. They discuss the balance between training and inference, the importance of enterprise adoption, and what credit markets and open-source competition could signal for the next phase of AI investment.

 UK Budget - first impressions

The Budget delivers modest fiscal changes with limited portfolio impact, while reinforcing the UK’s manageable debt outlook, although its collection of smaller measures appears driven more by politics than economics.