Will AI investment reach $200 billion globally by 2025?


Innovations in electricity and personal computers have left their mark on history, ushering in investment booms that contributed to as much as 2% of the U.S. GDP. Fast forward to today, and we're on the brink of a new wave of investment – one that could potentially have an even more significant impact on our economy. According to Goldman Sachs Economics Research, artificial intelligence (AI) is the game-changer, with a forecasted investment of around $200 billion globally by 2025. In this blog, we'll explore the potential of AI investment and its implications for our future.

## **AI's economic potential**

Generative AI, a subset of artificial intelligence, holds enormous economic potential. It could boost global labor productivity by more than 1 percentage point each year in the decade following its widespread adoption. This revelation comes from a report by Goldman Sachs economists Joseph Briggs and Devesh Kodnani. But here's the catch – to unlock this potential, businesses need to make substantial upfront investments in physical, digital, and human resources to acquire and implement these new technologies. These investments, expected to reach approximately $200 billion globally by 2025, are the stepping stones to major productivity gains.

![](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Will%20AI%20Investment%20Reach%20%24200%20Billion%20Globally%20by%202025/Al%20investment%20is%20likely%20to%20grow%20in%20the%20next%20three%20years-min.webp)

## **A slow climb to economic impact**

AI-related investment is steadily climbing, but it's starting from a relatively low point. It might take a few years before its impact on the economy becomes significant, as highlighted by Briggs and Kodnani. The United States is at the forefront of AI technology, positioning American companies as early adopters. However, other AI leaders, like China, may follow suit, albeit with a smaller and more delayed investment impact.

## **The long-term vision for AI investment**

Looking further down the road, AI-related investment could reach remarkable heights. Goldman Sachs Research suggests it could peak at 2.5 to 4% of the U.S. GDP and 1.5 to 2.5% of GDP in other major AI-leading countries if their AI growth projections are realized.

![](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Will%20AI%20Investment%20Reach%20%24200%20Billion%20Globally%20by%202025/Al-related%20investment%20could%20peak%20at%20more%20than%202%20of%20GDP%2C%20while%20software%20investment%20persists-min.webp)

\
Though the timing of the AI investment cycle remains uncertain, business surveys indicate that its investment impact might begin in the second half of this decade, with larger firms in information and professional, scientific, and technical services leading the way.

## **Market interest in AI on the rise**

Interest in AI is already soaring. More than 16% of companies in the Russell 3000 mentioned the technology on earnings calls, a significant jump from less than 1% in 2016. Interestingly, about half of this increase happened after the release of ChatGPT in the fourth quarter of 2022. Previous research by Goldman Sachs has shown that such mentions often predict increases in company-level capital spending.

![](<https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Will%20AI%20Investment%20Reach%20%24200%20Billion%20Globally%20by%202025/Where%20do%20chief%20economists%20expect%20the%20risk%20of%20stagflation_-min%20(3).webp>)

## **Estimating AI investment**

Combining market trends with equity analysts' revenue growth projections, Goldman Sachs Research estimates that AI investment could reach $100 billion in the United States and a staggering $200 billion globally by 2025. Despite this rapid growth, the immediate impact on GDP is expected to be fairly modest. AI-related investment currently represents only a small fraction of both U.S. and global GDP.

## **Where AI investment will concentrate**

AI investment is anticipated to focus on four key business segments: companies that train and develop AI models, those providing infrastructure (such as data centers) to run AI applications, companies developing software for AI-enabled applications, and enterprise end-users paying for these software and cloud infrastructure services. Economists expect hardware investment for training AI models and running AI queries to be a significant driver, alongside increased spending on AI-enabled software.

## **The road to generative AI scaling**

So far, AI investment has concentrated on model development. However, a more substantial push in hardware and software is likely required for generative AI to scale. It's a work in progress, but signs of early AI adoption are already evident in some industries. Goldman Sachs Research suggests that the broader macroeconomic effects are still a few years away. The pace of adoption remains unpredictable, and history shows that the full impact on the economy becomes apparent only when a critical mass of businesses embrace the technology.

## **The future of AI investment**

As we look ahead, the potential of AI investment to shape our future is undeniable. With a forecast of $200 billion globally by 2025, the impact on our economy is set to be transformative. While we're in the early stages of this journey, the signs of change are all around us. AI investment represents a new era of innovation and economic growth, where the possibilities are limitless, and the implications are far-reaching. The next decade promises to be an exciting one as we watch AI reshape our world.


Goldman Sachs Economics Research highlights the transformative potential of artificial intelligence (AI) investment, forecasting a global investment of $200 billion by 2025. Generative AI, a subset of AI, could boost global labor productivity by over 1% annually in the decade following widespread adoption. While AI-related investment is on the rise, particularly in the United States, its significant impact on the economy may take a few years. Long-term projections suggest AI investment could reach 2.5 to 4% of the U.S. GDP and 1.5 to 2.5% of GDP in other leading AI countries. Despite rapid growth, the immediate GDP impact is expected to be modest. AI investment trends focus on model development, hardware, and software, with anticipated concentration in companies training AI models, infrastructure providers, software developers, and enterprise end-users. The road to scaling generative AI requires substantial investment in hardware and software, with macroeconomic effects expected in the coming years. Overall, AI investment signifies a new era of innovation and economic growth, shaping a transformative future with limitless possibilities.

Will AI investment reach $200 billion globally by 2025?

Keep reading

Subscribe to Hedonova's newsletter