The rapid advancement of artificial intelligence (AI) has been a driving force behind transformative shifts in various sectors. As history has shown, technological revolutions such as electricity and personal computers triggered investment booms and substantial economic growth. According to Goldman Sachs Economics Research, AI investment is poised to be the next catalyst for economic expansion, potentially surpassing the impacts of previous innovations.
Goldman Sachs economists Joseph Briggs and Devesh Kodnani assert that AI, particularly generative AI, holds immense economic potential. Their research suggests that widespread adoption of AI could elevate global labor productivity by more than 1 percentage point annually over the course of a decade. However, this large-scale transformation demands substantial upfront investments in physical infrastructure, digital technologies, and skilled human resources.
AI investment has been steadily rising, and while it is still in its nascent stages, it is poised to have a lasting impact on the economy. Goldman Sachs Research forecasts that American corporations, spearheaded by the U.S.'s leadership in the AI market, will be early adopters. Similarly, other AI leaders like China are expected to follow suit, albeit at a slightly delayed pace.
Estimates from Goldman Sachs Research indicate that AI-related investment could reach anywhere between 2.5 and 4% of U.S. GDP and 1.5 to 2.5% in other key AI-leading nations. While these projections are impressive, it's important to note that AI's effect on the economy won't be immediate. Even though over 16% of Russell 3000 companies have mentioned AI in earnings calls, the real impact will take time to materialize.
Goldman Sachs Research suggests that larger enterprises in information, professional, scientific, and technical services will be early adopters of AI in the coming years. Despite the rapid growth in AI investments, the near-term effect on GDP is expected to be modest due to AI's current low share of global and U.S. GDP.
AI investments are anticipated to focus on key segments such as AI model training and development, data centers hosting AI applications, AI-enabled software development, and enterprise end-users procuring these services. The evolution of generative AI, however, may require a substantial push in hardware and software investment.
Historical precedent suggests that wide-scale adoption of transformative technologies takes time. For instance, the electric motor's and personal computer's productivity impacts were realized only after significant adoption rates were achieved. Additionally, a 2021 American Business Survey revealed that only 4% of U.S. enterprises were using AI in their operations. CEO surveys indicate that while generative AI might not significantly affect organizations in the next one to three years, the majority are planning to incorporate AI within three to ten years.
The potential of AI remains vast, and its journey will shape the global economy for years to come.