Remember when OpenAI unleashed ChatGPT, its generative AI chatbot? Of course, you do. It was the same day the S&P 500 was a measly $5 trillion less in value, the economy was nursing a post-pandemic hangover, and the scent of recession or persistent high inflation was thick in the air.
Boy, were we wrong!
Unleashing the AI Beast
Post-ChatGPT, the S&P 500 got a 3% shot in the arm. Tech stocks housing artificial intelligence products came to life like a pack of wolves smelling blood. Microsoft, an OpenAI investor, saw its value shoot up by 6%. AI chipmaker Nvidia? Up by 8%. The giants weren’t left behind either, with Alphabet jumping 6% and Meta Platforms taking a near 8% hike.
Dan Ives, a Wedbush Securities analyst, sees this as the new gold rush. ChatGPT is playing the role of a generous landlord, potentially unlocking $1 trillion in artificial intelligence-related spending over the next decade. Not something that Wall Street saw coming, eh?
A New Roaring ’20s
Forget the Jazz Age! It seems we’re headed into a new Roaring ’20s powered by AI. A surge in productivity, fueled by generative AI, could bring relief to an economy burdened with a worker shortage, an aging population, and deglobalization. Deutsche Bank economists aren’t shy to call AI an “immense source of optimism” for the decade ahead.
But here’s the kicker. The Apple iPhone, cloud computing, robotics – they all promised a productivity surge. Didn’t quite deliver as expected, though. Is it going to be different this time?
The Generative AI Game Changer
Well, let’s crunch some numbers. Goldman Sachs economists forecast that generative AI could bump U.S. labor productivity growth by 1.5 percentage points annually for the next decade. That would mean doubling the feeble 1.4% rate since 2005. As for the S&P 500? It could see profit margins broaden by a whopping four percentage points.
What’s driving this? The head-spinning adoption of ChatGPT, which amassed its first 100 million users in a ground-breaking two months. This paints a picture of a productivity boom in the making.
A Revolution in Knowledge Work
Not just words, generative AI also has a trick up its sleeve – it can whip up images, computer code, and complex designs. Microsoft’s GitHub Copilot, for example, uses OpenAI’s GPT-4 to turn software developers’ prompts into snippets of code, speeding up their work by 55%.
And it’s not just the tech industry. Engineering, architecture, drug discovery – generative AI has its fingerprints all over them. McKinsey & Co. identifies a common thread – the impact is most transformative for higher-wage knowledge workers who were previously considered safe from automation.
Risks and Rewards
Of course, as with any good thing, there’s a price. Literally. The costs to inference ChatGPT exceed the training costs on a weekly basis, according to SemiAnalysis.
But guess what? Wall Street is ready to place its bets. Morgan Stanley analysts see the AI semiconductor market ballooning from $43 billion to $125 billion over the next three years. As for the broader AI technology market, it should rocket from $90 billion today to $275 billion by 2027.
Conclusion
In conclusion, brace yourselves. The AI boom is here, and it’s not just another tech bubble. It’s a reality that’s set to revolutionize the way we live, work, and think.
