Bain says AI market would need to reach $6 trillion to justify the capital investment
By 2031, annual spending on artificial-intelligence infrastructure could reach about $1.5 trillion, according to Bain.
Most of the revenue needed to justify the heavy investment made to build out artificial-intelligence capabilities is so far unaccounted for, according to a report released Tuesday by the consulting giant Bain & Co.
A team at the Boston, Ma.-headquartered company, led by David Crawford, head of the global technology practice unit, estimated that by 2031, annual spending on AI infrastructure could rise to $1.5 trillion.
Assuming that capital expenditures count for around 25% of sector revenue, maintaining this investment would require the market to approach $6 trillion on a yearly basis, the consultants wrote in a report published Tuesday.
The Bain team do estimate the consumer and commercial segment of the industry could climb to between $1.2 trillion and $1.8 trillion if subscriptions and advertising generate $200 billion to $400 billion by 2031 and enterprise adoption leads to another $1 trillion to $1.4 trillion in productivity gains.
But this leaves at least about $4.2 trillion to fund AI infrastructure.
"Dramatic innovation will be required to deliver the revenue necessary to fund the gap," the consultants wrote, outlining four categories likely to help increase growth.
Integrating advertisements into AI chatbots and encouraging the use of the tool to replace internet searches could contribute a further $100 billion to an upward of $200 billion, Bain found.
"Using AI to autonomously operate automobiles, trucks, and drones, as well as other industrial automation initiatives, represent a $400 billion market opportunity by increasing equipment uptime while reducing training and operating costs," they said.
Model providers could find another $900 billion through the physical AI economy, especially by using AI-powered robotics in sectors including automotive, electronics, semiconductors and aerospace and defense, the consultants said.
Finally, the consultants suggested new product development, like AI-driven drug discovery or scientific research.
"The infrastructure is being built ahead of the demand curve, and funding it sustainably will require adding approximately 1% to the annual global GDP growth rate," they wrote. "The question is whether the applications arrive in time to pay for it."
The Magnificent Seven stocks MAGS, which apart from Apple have all made big AI investments, have gained 8% this year, underperforming the 12% rise for the broader S&P 500 SPX.
-Nora Redmond