Enhancing Growth Through Artificial Intelligence
2023 was a pivotal year for artificial intelligence (AI) as some of the largest technology companies in the United States introduced new AI tools, products, and services. Researchers at Goldman Sachs and McKinsey expect productivity gains from AI integration to bolster the economy in the coming years. Haim Israel, head of thematic global research at Bank of America, anticipates that 2024 will be a “very significant” year for AI, particularly regarding new generations of AI models and government regulation.
The Year of AI
In 2023, some of the largest technology companies in the United States by market capitalization, including Microsoft (MSFT), Alphabet (GOOGL), Meta (META), Amazon (AMZN), and Nvidia (NVDA), launched new products and services for AI. Fueled by investor enthusiasm for their AI efforts, the stocks of these five companies rose by 50% or more in 2023 in the latter weeks of the year, with Nvidia and Meta leading the pack at 250% and 176% respectively, by the end of trading on December 18.
OpenAI, supported by Microsoft, released updated versions of ChatGPT this year after its launch in November 2022, providing significant improvements to the popular productivity AI tool (GenAI). CEO Sam Altman reported in November that there are over 100 million weekly active users of ChatGPT and that more than 90% of Fortune 500 companies rely on OpenAI products.
As AI evolves, more workers and companies are integrating it into their workflows, according to surveys. More than half (56%) of American workers reported using GenAI at work, and 42% of CFOs indicated that their companies are exploring ways to leverage the technology. Consultants even warned that companies waiting to adopt AI risk falling behind competitors.
AI quickly emerged as one of the top investment themes of the year, with AI mentions reaching all-time highs in earnings calls and term searches on Investopedia. However, experts predict that some of the biggest gains from AI may still lie ahead.
GenAI to Drive Growth, Economists’ Forecasts
Goldman Sachs economists recently raised their 10-year GDP forecasts due to expected economic gains from AI integration, stating that “our expectation is that productivity AI will have a measurable macroeconomic impact.”
The economists noted that they “expect the effects on productivity to be meaningful,” estimating that AI could contribute to an increase in annual U.S. productivity growth by 1.5 percentage points if widespread adoption is achieved over the next decade.
Separately, McKinsey researchers reported that “the impact of productivity AI could add trillions of dollars to global economic value,” estimating that GenAI could contribute the equivalent of $2.6 trillion to $4.4 trillion annually.
McKinsey predicted that “productivity AI could enable labor productivity growth by 0.1 to 0.6 percent annually through 2040, depending on the pace of technology adoption and the redistribution of work time to other activities. The use of AI in labor, alongside all other technologies, could add between 0.2 to 3.3 percentage points annually to productivity growth,” according to estimates.
Goldman economists estimate that “GenAI could yield benefits in automating about 25% of work tasks” in major advanced markets like the U.S., expecting that increased automation will contribute to “labor cost savings and free up worker time, a portion of which is likely to be allocated to new tasks.”
The Year
2024 could be a “very significant” year for artificial intelligence
As artificial intelligence rapidly evolves, it may be difficult to predict its future capabilities and impacts, but Haim Israel, Head of Global Thematic Research at Bank of America, expects 2024 to be a “very significant” year for AI, particularly concerning new generations of AI models and government regulation.
Israel told Investopedia, “For generative AI, we really see all the factors aligning to create a massive revolution,” adding that “no technology has been adopted this quickly before” and that it is “evolving at an incredible speed.”
Israel mentioned that “a key discussion in 2024 will also be around the next generation of AI-based technology,” which may include emotional AI and simulation, providing data for sectors where datasets are not available.
He pointed out that another aspect of AI expected to be a top priority in the new year is regulation, as governments work to protect against potential harms arising from widespread AI adoption.
The upcoming elections could highlight concerns related to AI and privacy as well as the dissemination of misinformation, with Israel stating that “2024 will be a year when lawmakers around the world need to start addressing” the effects of AI.
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