"The current AI boom is not sustainable, a Deutsche Bank research note said this morning, because tech spending won't "remain parabolic." AI capex is now so massive it is keeping the U.S. out of recession, the bank said. Separately, Bain & Co. estimate there will be an $800 billion shortfall in the revenues needed to fund the demand for AI computing power. About half the S&P 500's gains this year have been driven by tech stocks."
"Separately, Bain & Co.'s annual global technology report says that AI won't be able to generate enough revenue to sustain the computing power it needs to build. "Two trillion dollars in annual revenue is what's needed to fund computing power needed to meet anticipated AI demand by 2030. However, even with AI-related savings, the world is still $800 billion short to keep pace with demand," the report says."
"There isn't consensus on Wall Street on this, however. Goldman Sachs took a more bullish view this morning. "We expect productivity gains from artificial intelligence (AI) to boost GDP significantly, by about 0.4% through the next few years and 1½% cumulatively as adoption rises over the long run. Once it is widely adopted, AI is likely to allow workers and firms to produce more output for a given set of inputs, which will raise [total factor productivity] growth," Manuel Abecas"
Tech capital expenditure for AI has become extremely large and is materially supporting U.S. GDP, averting a possible recession in the absence of such spending. Annual revenues must reach $2 trillion by 2030 to fund anticipated AI computing demand, but an $800 billion revenue shortfall is projected. A handful of large tech firms have driven much of the stock market gains through AI investments. Some analysts project productivity-driven GDP gains from broad AI adoption over coming years, creating divergent views on the sustainability and macroeconomic implications of current AI spending.
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