Goldman Sachs and MIT analysts conducted a comprehensive review to determine the short- and long-term viability of the generative artificial intelligence (AI) market for investors. The question looming over the research is whether the current AI market is an expanding bubble ready to burst, or whether it represents the âpick and shovelâ phase of the next frontier for technology and industry.
The report includes interviews with four Goldman Sachs economists and an MIT economics professor. Predictions are split between three Goldman Sachs economists who predict the killer application of AI will arrive soon, and the remaining Goldman Sachs economist and an MIT professor who seem more skeptical in the short term.
According to MIT professor Daron Acemoglu: âGiven the focus and architecture of today's generative AI technology⊠truly transformative changes will not occur quickly, and very little, if any, will likely occur in the next 10 years.â
The report states that âtech giants and beyond are set to spend more than 1tn on AI capex in the coming years.â With this level of investmentâmostly in infrastructureâthe products and services generated from the investments need to be strong enough to support and sustain current and future financing.
According to Goldman Sachs US software equity research analyst Kash Rangan, the outlook is positive despite the size of current investments: "Spending is certainly high in absolute dollar terms today. But this capex cycle looks even more promising than previous capex cycles."
"It's impossible to attend demonstrations of generative AI's capabilities at company events or developer conferences and leave without being excited about its long-term potential," Eric Sheridan, Goldman Sachs US internet equity research analyst, said in interviews.
But realizing this potential may depend on whether mass adoption of generative AI's iPhone moment is imminent.
We welcome your comments: What could be the killer application of AI? Is AI a bubble or the next frontier for technology and industry?
