Skip to content
Article

A Big Tech Arms Race Is Fueling the AI Boom. Are Productivity Gains or Business Efficiencies in Sight?

July 3, 2024 | 1 minutes reading time | By David Weldon

Some of the billions of investment dollars make their way into risk and other enterprise-level solutions, but the big payoffs will take time to emerge.

Artificial intelligence is driving a bull market in stocks, a win for investors. For economists, however, the payoff will be measured longer-term, depending on how billions of dollars of technology investments filter down in terms of productivity and business efficiency.

If they pan out, AI could prove to be more consequential than previous technology waves, and Big Techs are banking on it. Microsoft has invested some $13 billion in OpenAI, establishing a close partnership with the creator of ChatGPT. Amazon has put $4 billion into another generative AI (GenAI) leader, Anthropic. Google parent Alphabet and Facebook parent Meta have signaled their intentions with tens of billions each in planned capital expenditures.

Goldman Sachs Economics Research last year projected total investments as high as $100 billion in the U.S. and $200 billion globally by 2025. These are seen as prerequisites for reshaping business processes and producing major productivity gains, though “the near-term GDP impact is likely to be fairly modest given that AI-related investment currently accounts for a very low share of U.S. and global GDP,” said...

to access this content.

Become a GARP Member to Unlock Exclusive Risk Insights and More!

  • Access timely articles, thought leadership, and an archive of on-demand webcasts, event recordings, and Chapter meeting presentations in our Member Multimedia Library.
  • Get regulatory capital data for global and regional banks in North America, Europe, Asia, and Africa through our Pillar 3+ data analytics platform from the GARP Benchmarking Initiative (GBI®).
  • Gain priority registration to attend any worldwide Chapter meeting for free, as well as preferential rates for GARP events and access to local members-only dinners and professional networking opportunities.
  • Receive comprehensive access via our digital GARP Learning platform to the latest curriculum readings, videos, end of chapter practice questions, and more for the program(s) of which you passed the exam(s).

Topics: Risks & Risk Factors

Trending