Artificial intelligence could eventually have a bigger financial impact on the American economy than electricity and personal computers, according to economists at investment banking giant Goldman Sachs.
In an Aug. 1 investment report, Goldman Sachs economists Joseph Briggs and Devesh Kodnani predicted that AI could pull as much as $200 billion in global investments by 2025 — with half of that in the United States — boosting its gross domestic product (GDP).
While past tech booms spurred by the introduction of electricity and PCs saw GDP grow 2%, Goldman economists estimated that AI could account for up to 4% of GDP in the United States and 2.5% in other nations that have already begun investing heavily in the technology.
Projection of AI investment growth globally and in the U.S., China over next three years. Source: Goldman Sachs
Goldman attributed much of the expected gains to the rapid advancements being made in generative AI. The most notable example of generative AI technology is OpenAI’s chatbot ChatGPT, but the sub-sector also includes tools such as image creation software Midourney, and text-to-speech generator Eleven Labs.
“Generative AI has enormous economic potential and could boost global labor productivity by more than 1 percentage point a year in the decade following widespread usage.”
But these productive benefits of generative AI come with a cost, namely that businesses will need to start investing heavily, and soon.
“For large-scale transformation to happen, businesses will need to make significant upfront investment in physical, digital, and human capital to acquire and implement new technologies and reshape business processes,” read the report.
Goldman also noted the number of companies that have mentioned or integrated AI, with 16% of Russell 3000 companies mentioning AI in their earnings calls. Considering this figure is up significantly from less than 1% in 2016, the bank said this puts America on the front foot when it comes to innovation in AI.
“The U.S., meanwhile, is positioned as the market leader in AI technology, and American companies will likely be relatively early adopters.”
The economists noted that while the timing of the AI investment cycle is hard to predict, current business surveys suggest that AI will begin to have its most significant investment impact after 2025.