Goldman Sachs Is Optimistic about Generative A.I. Investments in the 2020s

🔥 AI Investment Could Reach $200B Globally by 2025: Goldman Sachs

A look inside Goldman Sachs.

Friends,

This is a quick note with some charts I found relevant. No not electricity or fire, but better! Now I don’t believe LLMs are a General Purpose Technology, but you can appreciate the effort by those who stand the most to gain by trying to persuade us that it is.

Goldman Sachs is having a bad year in 2023, but they are saying the right things.

“Artificial intelligence may be one of the biggest technological leaps in history. It is poised to unlock new business models, transform industries, reshape people’s jobs, and boost economic productivity.” - Goldman Sachs

Another fascinating report by Goldman Sachs, basically saying investment in artificial intelligence is growing quickly and could have a bigger impact on U.S. gross domestic product (GDP) than the discovery of electricity or the advent of personal computers, Goldman Sachs (GS) said in a report of August 1st, 2023.

As summarized on a LinkedIn posts here,

AI investment is expected to be concentrated in four key business segments:

▶ Companies that train and develop AI models.

▶ Those that supply the infrastructure (for example, data centres) to run AI applications.

▶ Companies that develop software to run AI-enabled applications.

▶ Enterprise end-users that pay for those software and cloud infrastructure services.

Goldman Sachs Research estimates that such AI investment could reach $100 billion in the U.S. and $200 billion globally by 2025. That’s rather optimistic for an outlook considering open-source makes all of this much cheaper than having to work with Enterprises who specialize in foundational models.

Still LLMs have taken hold of the popular imagination and the relic social media channels that now pump out public relations manifestos as the pace of A.I.

Private investment in AI within the U.S. accounted for more than half of global investment in 2022, coming in at $47.4 billion of the $91.9 billion global total — which amounts to about 51.6% of the total AI investment.

The statements of hype are a testament to the optimism though:

Innovations in electricity and personal computers unleashed investment booms of as much as 2% of U.S. GDP as the technologies were adopted into the broader economy. Now, investment in artificial intelligence is ramping up quickly and could eventually have an even bigger impact on GDP, according to Goldman Sachs Economics Research. 

Boosting Productivity 1 Percentage Point a Year in the 2020s

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, Goldman Sachs economists Joseph Briggs and Devesh Kodnani write in the team’s report.

• In the 2021 American Business survey, only 4% of US firms reported using AI in their business processes.

• Market interest in AI increased rapidly, with more than 16% of companies in the Russell 3000 mentioning the technology on earnings calls, up from less than just 1% of those firms in 2016.

• FOMO: Some analysts argue, companies that fail to adopt AI technologies will likely face increasing challenges in remaining competitive and may miss out on the numerous benefits and cost savings that AI can offer.

Comparing LLMs to Electricity

• History will tell us if Generative A.I. is a GPT. I’m sure Monopoly Capitalism will want to make this case.

Goldman Sachs stated in the report that “AI investment is going to touch around $200 Billion globally by the end of 2025”.