Blissful boom? Bubble set to burst? Or are we merely bovine in our AI adulation?<\/p>\n
We all have views on AI, and Goldman Sachs is the latest to share one. The company says the AI boom is still in its early stages, despite growing market concerns that an AI bubble could be forming.<\/p>\n
Analysts at the Wall Street bank argue that current investment levels remain small compared with the potential economic payoff.<\/p>\n
\u201cThe enormous economic value promised by generative AI justifies the current investment in AI infrastructure and overall levels of AI investment appear sustainable as long as companies expect that investment today will generate outsized returns over the long run,\u201d they wrote in a note this week<\/a>.<\/p>\n Goldman cited two main reasons for its optimism: AI applications are already boosting productivity in certain areas, and realizing those benefits requires significant computing power.<\/p>\n The firm estimates that widespread AI adoption could add $20 trillion to the US economy, including $8 trillion in capital income for companies.<\/p>\n \u201cGenerative AI still appears set to deliver a rapid acceleration in task automation that will drive labor cost savings and boost productivity,\u201d the analysts said, projecting a 15% increase in US labor productivity over a decade.<\/p>\n Even with record spending on chips, servers, and data centers, Goldman says AI investment remains modest compared with past technology revolutions. The firm estimates that U.S. AI-related investment accounts for less than 1% of GDP, far below the 2% to 5% seen during the railroad boom, the 1920s electrification wave, and the late 1990s dot-com era.<\/p>\n Goldman\u2019s analysts said the macroeconomic justification for AI investment remains compelling and they are \u201cless concerned about the dollar amount of AI capex.\u201d They estimate that about $300 billion will be spent annually in 2025, calling it an appropriate level given the long-term returns.<\/p>\n Still, the analysts acknowledged \u201cvalid concerns\u201d about whether the companies investing the most in AI will ultimately benefit, particularly as hardware depreciates quickly. They cautioned that history shows first movers don\u2019t always come out on top. \u201cFirst movers\u201d in industries like railroads and telecommunications often struggled, with later entrants buying assets cheaply after early overinvestment.<\/p>\n \u201cThe current AI market structure provides little clarity into whether today\u2019s AI leaders will be long-run AI winners,\u201d the note said. \u201cFirst-mover advantages are stronger when complementary assets (e.g., semiconductors) are scarce and production is vertically integrated \u2014 suggesting that today\u2019s leaders may outperform \u2014 but weaker in periods of rapid technological change like today.\u201d<\/p>\n Many early adopters are also spreading their bets by using multiple AI models instead of committing to a single platform, potentially weakening the advantages of incumbents.<\/p>\n The analysts added that as long as productivity gains and model improvements continue, companies will likely keep investing in AI.<\/p>\n \u201cSo while investment should eventually moderate as the AI investment cycle moves beyond the build phase and declining hardware costs dominate, the technological backdrop still looks supportive for continued AI investment,\u201d they wrote.<\/p>\n Goldman\u2019s report comes amid a broader debate over whether AI has fueled another speculative tech bubble.<\/p>\n Last week, strategists at Morgan Stanley and Goldman Sachs argued that AI stock valuations remain justified when measured against earnings growth, cash flow, and profit margins.<\/p>\n Arguments about AI will happen all the time. The White House says Anthropic is fearmongering. Anthropic says Washington\u2019s asleep at the wheel<\/a>.<\/strong><\/p>\n The post AI Boom Barely Begun, Goldman Sachs Says<\/a> appeared first on eWEEK<\/a>.<\/p>","protected":false},"excerpt":{"rendered":" Blissful boom? Bubble set to burst? Or are we merely bovine in our AI adulation? We all have views on AI, and Goldman Sachs is the latest to share one. The company says the AI boom is still in its early stages, despite growing market concerns that an AI bubble could be forming. Analysts at […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-5430","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/cybersecurityinfocus.com\/index.php?rest_route=\/wp\/v2\/posts\/5430"}],"collection":[{"href":"https:\/\/cybersecurityinfocus.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cybersecurityinfocus.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/cybersecurityinfocus.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5430"}],"version-history":[{"count":0,"href":"https:\/\/cybersecurityinfocus.com\/index.php?rest_route=\/wp\/v2\/posts\/5430\/revisions"}],"wp:attachment":[{"href":"https:\/\/cybersecurityinfocus.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5430"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cybersecurityinfocus.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5430"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cybersecurityinfocus.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5430"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Optimism and adoption<\/h2>\n
AI investment is modest by historical standards<\/h2>\n
The winners may not be today\u2019s biggest spenders<\/h2>\n