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Since ChatGPT was introduced in late 2022 and Microsoft (NASDAQ:MSFT) backed its creator, the world has been overtaken by generative artificial intelligence and its broader implications for the global economy and society as a whole. And while some research firm believe generative AI could upend every sector, UBS believes the enthusiasm may need to be tempered — even just for a bit.
“We are witnessing the start of a major investment boom and technological advance that may fundamentally affect all economic sectors,” UBS wrote in an investor note. “However, use cases need to develop further to justify these investments.”
Estimates vary on how much investment AI will drive, but most believe it will result in additional trillions of dollars in investment over the next decade, UBS said. As such, the implications for companies, workers and investors are enormous.
“While it is too early to accurately quantify the aggregate productivity enhancements from AI, anecdotal evidence suggests substantial efficiency gains,” UBS wrote. “For example, developers code up to 55% faster with the use of GitHub Copilot8. Boston Consulting Group estimates that customer service operations will become 30–50% more efficient when generative AI is implemented at scale.”
Companies that are likely to see a benefit from increased spending on AI in the three layers (enabling, intelligence and applications) include Google (GOOG) (GOOGL), Microsoft, Amazon (AMZN), Meta (META), Nvidia (NVDA), Tencent (OTCPK:TCEHY), Baidu (BIDU), Alibaba (BABA) and Huawei, UBS said.
Analysts at the firm laid out a series of predictions for how AI will reshape the global economy and their broader implications.
1. AI will be the most profound innovation and one of the largest investment opportunities in human history.
2. AI will kick off a data center capex cycle that will dwarf general purpose data center capex in the next years.
3. The ratio of monetization of the AI application layer to the costs of the enabling and intelligence layers will become a key metric for investment returns.
4. The race to artificial general intelligence could trigger a capex cycle that inflates an investment bubble where the capex of the enabling layer is dissociated from near-term monetization potential of the application layer.
5. The AI enablers will be the first adopters of AI, driving both revenue and margin upside.
6. Monolithic players will emerge along the AI value chain and over time, the AI market will be dominated by an oligopoly of vertically integrated “AI foundries.”
7. The AI silicon moment: AI chips will capture a large part of the AI value creation.
8. The application and intelligence layers will merge with AGI.
9. Software will become ubiquitous.
10. Data assets will emerge as the competitive differentiators for AI adopters information technology.
