AI Investment Is Colliding With the Physical Limits of the Global Economy

BlackRock argues that the next phase of the AI boom will increasingly be shaped not by software innovation alone, but by financing constraints, energy security, and geopolitical fragmentation. 

• Hyperscaler capital expenditure projections are approaching $1tn annually by 2028, intensifying demand for semiconductors, power infrastructure, data centers, and financing.
• BlackRock sees the Strait of Hormuz disruptions as exposing the vulnerability of global energy flows precisely as AI dramatically increases electricity consumption and industrial demand.
• The firm continues to overweight U.S. equities and AI infrastructure beneficiaries while warning that traditional portfolio hedges — especially long-duration Treasuries — are becoming less reliable in a structurally inflationary world.

The report suggests the AI era is evolving into something larger than a technology cycle: a full-system industrial buildout where energy, geopolitics, capital markets, and computing power increasingly converge.