Keeping the faith in AI- Goldman Sachs edition

KEEPING THE FAITH IN AI - GOLDMAN SACHS EDITION

Barclays economists, (see below), have been dismantling the popular view that AI will lead to meaningful improvements in economic growth or labour productivity.

But faith is not wavering all over Wall Street.

Goldman Sachs' Jan Hatzius writes in note that although it is hard to know whether today's AI leaders will be the long-term winners from the tech, the economic boost from the tech could be worth as much as $19 trillion.

In his words: "We continue to see current investment levels as quite sustainable, even though it is less clear whether companies making the investments today will emerge as AI winners."

"Generative AI still appears set to deliver a rapid acceleration in task automation that will drive labor cost savings and boost productivity, with our baseline estimates suggesting a 15% gross uplift to economy-wide US labor productivity following full adoption, which we expect will realize over a 10-year period."

"Academic studies and company anecdotes point to 25-30% average productivity gains following the deployment of AI applications."

"The average impact will likely moderate as applications broaden to job functions that are harder to automate. But these early estimates highlight the potential for generative AI to deliver transformative productivity uplifts when appropriately deployed."

An MIT study in August discovered that 95% of corporate AI experiments so far had not delivered measurable value.

Hatzius argues this study was "less concerning" than it might have appeared, because:

"Our overall takeaway is that effective AI adoption may take time as companies figure out how to incorporate specific applications into business processes."

"AI can deliver sizeable productivity gains once this occurs."

"We believe that the potential economic gains promised by generative AI justify a multi-trillion dollar investment cycle."

(Naomi Rovnick)

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