Apple announced last month that it was boosting prices for laptops and iPads by about 15% to 25%, with a top-line MacBook now costing $1,999, up from $1,699. That’s the cleanest sign yet of who pays when the tech giants pour money into data centers: ordinary people buying the hardware, the electricity, and the rest of the bill.
Who Pays for the AI Rush
American consumers and the Federal Reserve are facing another high-cost headache as the rapid buildout of artificial intelligence pushes up prices for laptops, smartphones, video game consoles, computers and electricity. The gusher of investment in data centers, likely topping $700 billion this year, has made memory chips, computer processors and other equipment more expensive, and economists expect the pressure to continue at least through the end of this year.
Four large tech companies — Google parent Alphabet, Amazon, Meta Platforms and Microsoft — are expected to invest $720 billion this year, mostly on data centers. Those data centers use a lot of semiconductors, and chip supplies have run low. Economists at JPMorgan Chase estimate the cost of some computer memory chips will have soared by as much as 400% between 2024 and the end of this year. The bosses at the top spend. Everyone else gets the invoice.
Consumers are already seeing higher prices for laptops, smartphones, video game consoles and computers. Electricity prices are also jumping as data centers absorb a growing share of new electrical capacity. Apple said, "The rapid expansion of AI data centers has created an extraordinary surge in demand for memory and storage," and added, "We have never seen a component price increase this much, this quickly."
On the same day, Microsoft announced that the price of its Xbox video game console will increase $100 by Aug. 1, citing higher prices for memory chips. Sony is also charging more for the PlayStation, while Dell Computer and HP have raised prices for their laptops. The market’s answer to a corporate spending spree is simple: raise prices and pass the pain down.
The Central Bank Watches the Damage
Fed officials are watching June's inflation report, due Tuesday, for more signs of AI's effect on prices. Inflation likely cooled last month as gasoline prices fell after a ceasefire between the U.S. and Iran, though that trend is now unclear because the U.S. and Iran have resumed fighting. The calm never lasts long when states and markets keep throwing people into the churn.
While the increase is not expected to match the 2021-2023 inflation spike, when inflation peaked at 9.1%, massive AI spending is likely to keep prices rising faster than the Federal Reserve wants. That could lead the central bank to lift its key interest rate later this year to cool spending and bring inflation down. Higher rates often raise borrowing costs for auto loans, mortgages and business loans. So the answer from above may be another squeeze, this time through credit.
Many economists forecast that AI investment will boost core consumer prices, which exclude food and energy, by roughly a half-percentage point by the end of this year. That could offset declining prices elsewhere as the impact of President Donald Trump's tariffs fades and rental costs cool. Core inflation, according to the Fed's preferred measure, was 3.4% in May, and some economists now expect it may decline only slightly by the end of the year, remaining well above the Fed's 2% target.
Abiel Reinhart, an economist at J.P. Morgan, said, "In isolation one or two such shocks is perhaps transitory, something they're willing to live with. A sustained series of shocks, or a wider range of shocks, becomes more concerning to them." That’s the language of the apparatus: absorb a few shocks, then tighten the screws if the pressure keeps building.
Electricity, Chips, and the Cost of Power
Another channel through which AI could raise inflation is through its huge demand for electricity, which has caused many utilities to raise prices. Power companies throughout the U.S. are adding more capacity, an expensive step that can also boost electricity costs. The data centers don’t just eat chips. They eat power, too.
According to the government's consumer price index, electricity prices rose 5.9% in May compared with a year earlier, a bigger increase than overall inflation, which was 4.2%. After a pandemic spike, electricity price gains had dropped back to about 2% annually in early 2025. While prices for computer chips could peak this year and then decline, experts expect electricity demand from AI will push up utility costs into 2028 or even beyond. In February, economists at Goldman Sachs forecast that electricity prices will rise 6% this year and next, and an above-average 3% in 2028.
Analysts at investment bank Evercore ISI wrote that a "wave of AI-related cost pressures spilling over into consumer prices is still in the early stages of building." Dario Perkins, an economist at TSLombard, wrote this week, "We do know what effect AI is having on inflation now, and it is inflationary, not deflationary."
Fed policymakers are increasingly focused on AI's inflationary impact. Kevin Warsh, who took over as chair May 22, has said he believes that over time AI will make the U.S. economy more efficient, which should reduce inflation even as growth accelerates. He acknowledged in remarks July 1, however, that AI investment is now boosting demand, but declined to speculate on how inflationary the impact would be.
John Williams, president of the Federal Reserve Bank of New York and vice chair of the Fed's rate-setting committee, said Thursday, "If this creates a sustained impulse to demand relative to supply in inflation, I do think that's the kind of situation where you don't look through this." Williams has supported keeping rates unchanged, but his comment suggests that under some scenarios he could support a hike.
According to the minutes of the Fed's June 16-17 policy meeting, released Wednesday, many other officials share Williams' concerns. The central bankers can debate whether to look through the damage or hit the brakes. The people buying laptops, paying utility bills, or trying to borrow money don’t get much say in the setup.