Back in April 2023, Goldman Sachs released an investment report titled, "Generative AI could raise global GDP by 7%." At the time, the financial giant claimed that "advances in natural language processing work" could potentially "lift productivity growth by 1.5 percentage points over a 10-year period." It continued:
Added up, GS Research estimates the total addressable market for generative AI software to be $150 billion, compared with $685 billion for the global software industry.
As more generative AI tools are developed and layered into existing software packages and technology platforms, the team sees businesses across the economy benefiting.
But barely a year later, it seems that Goldman Sachs has changed its tune. At the end of June, the company published another report, this one titled, "Gen AI: too much spend, too little benefit?", which points out that, well, all those big promises being made last year by AI tech companies? None of them have really managed to turn into anything of value yet. Oops.
From the report:
Even if AI could potentially generate significant benefits for economies and returns for companies, could shortages of key inputs—namely, chips and power—keep the technology from delivering on this promise? GS US semiconductor analysts Toshiya Hari, Anmol Makkar, and David Balaban argue that chips will indeed constrain AI growth over the next few years, with demand for chips outstripping supply owing to shortages in High-Bandwidth Memory technology and Chip-on-Wafer-onSubstrate packaging—two critical chip components.
But the bigger question seems to be whether power supply can keep up.
To be fair, the report does quote from a few Goldman Sachs analysts who remain "optimistic" about the investment potential for generative AI. It also acknowledges that while "AI's fundamental story is unlikely to hold up…the AI bubble could take a long time to burst."
This is my surprised face.
Gen AI: too much spend, too little benefit? [Goldman Sachs]