Since the release of ChatGPT in 2022, the value of America’s stockmarket has risen by $21trn. Just ten firms—including Amazon, Broadcom, Meta and Nvidia—account for 55% of the rise. All are riding high on enthusiasm for artificial intelligence, and they are not the only ones. In the first half of the year an IT investment boom accounted for all America’s GDP growth; in the year to date a third of the West’s venture-capital dollars have gone to AI firms.
The market is so hot because many believe AI will transform the economy. Investors at Sequoia Capital, a VC firm, recently argued it will be “as big if not bigger than the Industrial Revolution”.
In a podcast last year, Gavin Baker of Atreides Management, an asset manager, argued that AI luminaries are not just after the “tens of trillions or hundreds of trillions of value” the tech could add to their firms—they are “in a race to create a Digital God”. That belief would justify any amount of spending.
Will AI really become godlike? Perhaps, but a recent report by UBS, a bank, finds that revenue generation to date “has been disappointing”.
By our reckoning, the total revenue from the tech accruing to the West’s leading AI firms is currently $50bn a year. Although such revenues are growing fast, they are still less than 2% of the $2.9trn investment in new data centres globally that Morgan Stanley, another bank, forecasts between 2025 and 2028—a figure which excludes energy costs.
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