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Artificial intelligence is a complex subject, often mired in hype, semantic intricacies, and meaningless speculation. But when it comes to artificial intelligence sell-side research, things become even murkier.
Goldman Sachs has released a new report titled “The Magnitude and Timing of the AI Investment Cycle”, which attempts to provide some tangible figures on the rise of AI.
Unsurprisingly, Goldman Sachs believes that AI will have a massive impact:
A productivity boom resulting from AI could be comparable to those brought about by landmark technologies like the electric motor and the personal computer. While the exact timing and magnitude of these macro effects remain uncertain and difficult to predict, our previous analysis has shown that the economic implications in most scenarios will be significant.
Both historical data and economic theory provide insights into how these effects could start influencing the economy and global financial markets. The transition to a large-scale economic transformation requires substantial upfront investments in physical, digital, and human capital to acquire and implement new technologies, and to transition business processes. The impact of these investments will likely precede adoption and efficiency gains, leading to substantial productivity improvements.
Although the predictability of these effects is notoriously challenging, short-term projections can offer some insight. So, what’s the predicted approach?
By extrapolating recent trends in AI investment through changes in corporate mentions of AI and revenue growth projections by equity analysts, it is estimated that AI investment could rapidly grow to approximately $100 billion in the US and $200 billion globally by 2025 (Exhibit 4). However, despite this rapid growth, the immediate impact on GDP is expected to be modest due to the current low share of AI-related investment in both the US and global GDP.
If nothing else, this analysis suggests that one industry that could soon heavily rely on AI is the Technology sector.
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