According to a recent report by Goldman Sachs, global investment in artificial intelligence (AI) is set to surge to $200 billion in the next two years. This substantial growth has the potential to boost the overall economy.
The report highlights the economic potential of generative AI, a sub-sector of AI that focuses on creating new content based on large language models. Examples of generative AI include popular chatbots like ChatGPT and tools like Stable Diffusion, which generates original images from text prompts. The economists at Goldman Sachs believe that widespread usage of generative AI could increase global labor productivity by more than 1 percentage point annually over the next decade.
By 2025, AI investment is expected to account for around 4% of the U.S. GDP and 2.5% of the GDP in other countries investing in AI, such as China. This is comparable to the impact of past tech booms driven by electricity and personal computers, which contributed around 2% of GDP.
However, for this transformative growth to happen, businesses will need to make significant upfront investments in physical, digital, and human capital to acquire and implement new technologies. Despite the rapid growth in AI investments, the near-term impact on GDP is projected to be relatively modest due to AI’s current low share of GDP.
Goldman Sachs already observes a surge in corporate interest in AI, with 16% of Russell 3000 companies mentioning AI on earnings calls, a significant increase from 1% in 2016. The U.S. is at the forefront of global AI innovation, and American companies are likely to be early adopters of AI technology.
The projected AI investments are strategically targeted, with a focus on hardware investment for training AI models and running AI queries, as well as increased spending on AI-enabled software. Microsoft’s investment in ChatGPT developers OpenAI and Google’s investments in AI competitors like Anthropic indicate the intense competition in the AI market.
The widespread adoption of AI and the massive investments in the technology are expected to have broader implications for the global economy. McKinsey estimates that generative AI alone could contribute $4.4 trillion annually to the global economy. Overall, AI’s total projected economic impact is estimated to reach up to $15.7 trillion by 2030.
While AI development has been a boon for the U.S. economy, with the S&P 500 index experiencing one of its best years since the Great Depression, analysts caution that the competitive field of AI could be unsustainable in the long run. Nonetheless, the prospects for AI investment remain promising, and the technology is likely to continue transforming various industries and driving economic growth in the coming years.
