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Goldman Sachs says the return on investment for AI might be disappointing

Jun 30, 2024 - businessinsider.com
Tech companies are investing heavily in AI, with spending predicted to exceed $1 trillion, but a Goldman Sachs report questions whether this will yield a return on investment. The report highlights the high costs of AI technology, including the necessary data centers, power grid, and AI chips, and suggests that shortages of these could lead to disappointing returns. The report also criticizes the tech industry's assumption that AI costs will decline significantly over time.

Despite the high costs and potential shortages, some experts remain optimistic about the future of AI. They argue that while AI technology is expensive now, the cost equation will change, as it has with past technologies. Comparisons are made to initial reactions to now ubiquitous technologies like smartphones and Uber, suggesting that resistance to AI will also fade over time.

Key takeaways:

  • Companies are preparing to spend over $1 trillion on artificial intelligence, but there are concerns about whether this large investment will pay off, according to a Goldman Sachs report.
  • The high costs of AI technology and its inability to solve complex problems could lead to disappointing returns for companies.
  • There is an industry assumption that AI costs will decline substantially over time, but this is challenged by the dominance of Nvidia in the AI chips market.
  • Despite the current high costs and limitations, some experts believe the cost equation of AI technology will change, comparing it to the initial reactions to technological developments like the iPhone and Uber.
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