Standard Chartered’s Madhur Jha assesses how the effective closure of the Strait of Hormuz and the current energy shock could challenge AI optimism. The bank highlights near-term risks to semiconductor input supplies and longer-term risks to AI investment and demand. Historical evidence from prior Oil shocks suggests slower technology adoption and weaker productivity growth when operating costs rise.

Energy disruption clouds AI outlook

"The effective closure of the Strait of Hormuz and ongoing energy shock present potential short-term, as well as long-term, challenges to AI optimism."

"Over the more medium term, the main concerns revolve around the likelihood of a drop in investment spending on AI."

"While AI investment and output might be modestly impacted, more medium-term concerns will lie around demand for their products."

"Historically, oil shocks have lowered the rate of technology adoption by firms and led to a drop in productivity growth, as firms – facing higher operating costs – cut back on tech-related investment."

"The impact has been more severe during supply-driven oil shocks, as well as during periods of already heightened economic policy uncertainty."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)