Goldman Sachs Forecasts Sweeping Economic Impact of AI, Predicts $200B Investment by 2025

JJohn August 3, 2023 5:17 AM

Goldman Sachs economists forecast a monumental financial impact of artificial intelligence (AI) on the US economy, predicting AI investments could account for up to 4% of America's GDP by 2025. This future AI boom, they suggest, could even outpace the historical financial impacts of electricity and personal computers.

AI to attract $200B global investments

In an investment report dated Aug. 1, economists Joseph Briggs and Devesh Kodnani from Goldman Sachs project that AI could pull in a staggering $200 billion in worldwide investments by 2025. They foresee that half of this incoming flow of funds would be concentrated in the United States, giving a substantial boost to its gross domestic product (GDP). They contrast this potential AI boom with previous tech booms sparked by electricity and PCs, which saw GDP growth of only 2%

Generative AI to bolster global productivity

Goldman Sachs attributes a significant portion of the anticipated gains to the rapid advancements being made in generative AI. Highlighting tools like OpenAI’s ChatGPT, Midourney's image creation software, and Eleven Labs' text-to-speech generator as prime examples, the economists predict that generative AI could increase global labor productivity by more than 1 percentage point annually in the decade following its widespread adoption. However, the report also acknowledges that harnessing these productivity benefits will require businesses to make substantial upfront investments in physical, digital, and human capital.

The report notes an intriguing increase in the number of companies that have mentioned or integrated AI, with a significant 16% of Russell 3000 companies mentioning AI in their earnings calls. This figure marks a significant jump from less than 1% in 2016. Goldman Sachs considers this trend an indicator that the US is stepping up to spearhead innovation in AI. The report acknowledges the timing of the AI investment cycle is hard to predict, but current business surveys suggest that AI will begin to have its most significant investment impact after 2025.

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