Experts draw mixed opinions on value of AI in relation to costs - report

Some remain pessimistic about its effects on productivity

Experts draw mixed opinions on value of AI in relation to costs - report

Experts have expressed varying opinions regarding generative AI’s ability to enhance productivity as well as the value it can give in relation to its costs following chip and power shortages, a report by Goldman Sachs found, as reported in an article by BNN Bloomberg.

According to the report, large tech companies and corporations will be spending about US$1 trillion on capital expenditures in the coming years, which will include investments in data centers, chips, and other AI infrastructure elements. However, it also noted that the expenditures did not necessarily translate to anything beyond efficiency gains among developers.

“Even the stock of the company reaping the most benefits to date— Nvidia—has sharply corrected,” the report read.

The report included an interview with MIT professor Daron Acemoglu who remained skeptical about the transformational powers of AI as he estimated that only a quarter of tasks exposed to AI will be cost-effective to automate with the next decade. The professor further forecasted that AI will only increase productivity in the US by only 0.5% while GDP will only grow by 0.9% in the next 10 years.

Goldman Sachs Head of Global Equity Research Jim Covello pointed out that AI needed to be able to solve complex problems so that it may see an adequate return, which he believed it was not built to do. He also doubted that it will be boosting the valuation of firms since efficiency gains were likely to be competed away.

However, the report noted how Goldman Sachs Senior Global Economist Joseph Briggs remained optimistic as he estimated that gen AI will be automating 25% of all work tasks and will raise productivity in the US by 9% as well as GDP growth by 6.1% over the next 10 years. He also noted that the costs in AI-exposed tasks may drop in the long run, which may lead to more AI automation.

Goldman Sachs US Internet Equity Research Analyst Eric Sheridan also shared this optimism for the transformative potential of AI as investors rewarded firms which can “tie a dollar of AI spending back to revenues.”