UBS Predicts a 15-Fold Revenue Boost in AI Industry by 2027

The realm of Artificial Intelligence (AI) is bracing for a monumental swell in its value, with global financial services firm UBS expecting the AI market to swell to a staggering $225 billion by 2027.

Exponential Market Growth

UBS's research reveals an imminent surge within the AI sector, with the market anticipated to leap from a 2022 valuation of $2.2 billion to an impressive $225 billion in the next five years, constituting a massive 152% compound annual growth rate. This extraordinary growth trajectory signifies a vast increase in potential revenue for the industry, with expectations set for a 15-fold rise from the current $18 billion to $420 billion by 2027, a 40% jump from their earlier predictions.

The 'App Store Moment'

Coined as the 'App Store moment' for AI, UBS highlights the advent of new AI-driven applications, such as autonomous digital assistants crafted by OpenAI, as a catalyst for the 138% compound annual growth in software demand.

Infrastructure spending, vital for sustaining technology's robust and ongoing growth, is also projected to escalate. Investments in AI infrastructure are poised to mount from $25.8 billion in 2022 to an anticipated $195 billion by 2027.

"AI is set to be one of the fastest-growing segments in the global tech scene, potentially becoming the defining tech theme of the decade," the UBS research note mentioned.

Hardware and Regulation

Hardware, specifically AI chips and GPUs critical for AI training, stand to gain significantly from the heightened expenditure, promising a tenfold leap in revenues for semiconductor and platform companies, pushing industry earnings from $15.8 billion to $165 billion.

In the context of regulation, despite concerns over the increasing regulatory discussion regarding AI, UBS believes that early rule-setting could actually prove more advantageous than imposing restrictions during later stages of AI-industry growth.

Investment Landscape

AI technologies have recently undergone critical scrutiny, tasked with transcending beyond 'peak AI hype' to prove their tangible value in the market. Investors are taking a keen interest in ascertaining the returns on billions spent in AI research and development.

Yet, experts like Wolfe Research tech analyst, Alex Zukin, express caution, "With the sector at peak AI hype, there's likely a slide into a trough of disillusionment ahead as actual revenue generated from General AI takes longer than expected to crystallize."

AI, growth, revenue