Artificial intelligence (AI) is rapidly becoming a major player in the global economy. According to Goldman Sachs Economics Research, investment in AI is expected to approach $200 billion worldwide by 2025. This investment boom has the potential to have an even bigger impact on GDP than previous technological advancements such as electricity and personal computers.
The Economic Potential of Generative AI
Goldman Sachs economists Joseph Briggs and Devesh Kodnani emphasize the enormous economic potential of generative AI. They believe that widespread usage of AI could boost global labor productivity by over 1 percentage point annually for a decade. However, for this transformation to occur, businesses need to make significant investments in physical, digital, and human capital.
U.S. Leading the Way in AI Technology
The United States is positioned as the market leader in AI technology, with American companies likely to be early adopters. While other AI leaders like China may experience a similar effect, the impact of investment is expected to be smaller and delayed. Over time, AI-related investment could peak at 2.5 to 4% of GDP in the U.S. and 1.5 to 2.5% in other major AI-leading countries.
The Timing and Impact of AI Investment
The timing of the AI investment cycle is challenging to predict. However, business surveys suggest that it is likely to start impacting investment in the second half of this decade, particularly among larger firms in information and professional, scientific, and technical services. Market interest in AI has already grown significantly, with over 16% of companies in the Russell 3000 mentioning AI on earnings calls.
AI Investment Concentrated in Key Business Segments
AI investment is expected to be concentrated in four key business segments: companies that train and develop AI models, infrastructure suppliers (e.g., data centers), software developers for AI-enabled applications, and enterprise end-users. Our economists anticipate that the majority of AI investment will come from hardware and software spending, primarily for training AI models and running AI queries.
Early AI Adoption and the Macroeconomic Effects
While there are signs of early AI adoption in certain industries, the broader macroeconomic effects are still a few years away. Previous technological breakthroughs, such as the electric motor and personal computer, only had a meaningful impact on the economy once a significant number of businesses had adopted them. Currently, only 4% of US firms report using AI in their business processes, but the majority expect to have adopted AI within the next 3 to 10 years.
Looking Ahead: AI’s Impact on the Economy
Goldman Sachs Research estimates that AI investment could reach $100 billion in the U.S. and $200 billion globally by 2025. However, the near-term impact on GDP is expected to be modest due to the relatively low share of AI-related investment in the global economy. Nonetheless, as AI adoption continues to expand, the economy is likely to experience significant changes between 2025 and 2030.
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