According to economists at Goldman Sachs, artificial intelligence (AI) is poised to make a greater financial impact on the American economy than even electricity and personal computers did.
In their investment report released on August 1, Goldman Sachs economists Joseph Briggs and Devesh Kodnani projected that AI could attract up to $200 billion in global investments by 2025, with approximately half of that investment occurring in the United States.
This surge in AI investment is expected to contribute significantly to the country’s gross domestic product (GDP).
While previous technological booms associated with the introduction of electricity and PCs saw a 2% growth in GDP, the economists estimated that AI could be responsible for up to 4% of GDP growth in the United States and 2.5% in other nations that are already heavily investing in AI technologies.
Goldman Sachs attributed a significant portion of these anticipated gains to the rapid advancements being made in generative AI.
Generative AI, which includes technologies like OpenAI’s chatbot ChatGPT, image creation software Midourney, and text-to-speech generator Eleven Labs, is expected to have enormous economic potential.
The economists predicted that generative AI could boost global labor productivity by over 1 percentage point annually in the decade following widespread adoption.
However, while generative AI offers promising productivity benefits, businesses will need to make substantial upfront investments in physical, digital, and human capital to acquire and implement these new technologies and transform their business processes.
Goldman Sachs also highlighted the increasing prevalence of AI adoption among companies, with 16% of Russell 3000 companies mentioning AI in their earnings calls.
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This figure represents a significant increase from less than 1% in 2016, indicating that America is taking the lead in AI innovation.
The economists believe that American companies are likely to be early adopters due to the country’s position as a market leader in AI technology.
Regarding the timing of the AI investment cycle, it remains challenging to predict precisely. However, based on current business surveys, the economists suggest that AI will start to have its most significant investment impact after 2025.
In conclusion, economists at Goldman Sachs are optimistic about the financial potential of AI in the American economy.
They project that AI investments could be substantial, leading to substantial GDP growth and improved productivity in various sectors.
Although the transformation brought about by AI will require significant upfront investments from businesses, the potential benefits are expected to be substantial and could drive the American economy to new heights.
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