Artificial Intelligence Will Dominate The US Economy, Outpacing Electricity And PCs: Goldman Sachs

Key Points:

• Goldman Sachs predicts artificial intelligence’s impact to surpass that of electricity and personal computers on the US economy.
• Artificial intelligence could attract $200 billion in global investments by 2025, potentially contributing up to 4% of US GDP.
• Generative AI has massive economic potential, but significant upfront investments are required for its full transformation.

Goldman Sachs economists foresee that artificial intelligence (AI) will have a greater financial impact on the American economy than both electricity and personal computers. The investment report suggests that by 2025, artificial intelligence could attract $200 billion in global investments, with half of that expected to flow into the United States, significantly boosting the country’s gross domestic product (GDP).

While past tech booms resulted in a 2% increase in GDP with the introduction of electricity and personal computers, Goldman Sachs estimates that artificial intelligence could contribute up to 4% of GDP in the US and 2.5% in other nations heavily investing in artificial intelligence.

The core of this economic potential lies in generative AI, exemplified by OpenAI‘s chatbot, ChatGPT, and other transformative tools like Midourney (image creation) and Eleven Labs (text-to-speech). Once widely adopted, these AI technologies could drive global labor productivity up by over 1 percentage point annually for a decade. Recently, Worldcoin, a cryptocurrency project founded by OpenAI CEO Sam Altman, launched last week.

However, reaping these benefits requires substantial upfront investments in physical, digital, and human capital. Goldman Sachs projects global AI-related investments to reach $200 billion by 2025, occurring before efficiency gains lead to significant productivity growth.

The US holds an advantageous position as a market leader in artificial intelligence technology, with American companies expected to be early adopters. While other AI-leading nations like China may also experience similar effects, the impact on investments will likely be smaller and delayed.

Though the timing of the artificial intelligence investment cycle remains uncertain, business surveys suggest that its impact will be felt in the second half of this decade. Larger firms in information, professional, scientific, and technical services are expected to be at the forefront of AI adoption.

Market interest in artificial intelligence is surging, with a significant increase in the number of companies mentioning the technology on earnings calls. A large portion of this surge followed the release of ChatGPT in late 2022. Goldman Sachs’ previous research indicates that such mentions typically precede increased company-level capital spending.

Goldman Sachs credits much of the anticipated gains to the rapid advancements in generative AI. While early signs of artificial intelligence adoption are apparent in some industries, the broader macroeconomic effects are expected to take a few more years to fully materialize.

The combination of artificial intelligence and blockchain is poised to revolutionize the Web3 landscape, making projects more efficient and productive. Blockchain’s decentralized governance offers a safeguard against AI’s misinformation challenges. Additionally, AI-powered trading bots optimize crypto trading, increasing liquidity and market efficiency. Together, artificial intelligence and blockchain promise a bright and innovative future for decentralized technologies.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.