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The artificial intelligence industry needs to become creative with new propositions to earn $6 trillion in annual revenue by 2031 and justify the capital being deployed for data centres, a new report from Bain and Company has shown.
Revenue from new product development is projected to become the biggest contributor to the industry, estimated to generate about $4.2 trillion to fund the booming technology's global market within the next half-decade, the US consultancy said in its latest technology report series on Tuesday.
That segment would include innovations in search, advertising, autonomy and physical AI, analysts at Boston-based Bain said.
Enterprise productivity would require $1 trillion to $1.4 trillion in revenue in order to support gains in areas such as software development, sales, marketing, customer service and IT operations, they said.
Absorption speed, defined as the pace at which companies can put AI to work, has become the “new competitive variable”, according to Bain, leading AI labs are investing upwards of $9.75 billion in engineering models to help companies assimilate faster, it said.
“The debate today is fixated on employee productivity. The economics of AI infrastructure demand trillions in new revenue beyond productivity gains. What the industry needs is a wave of innovation that will dwarf what mobile and cloud unlocked,” said David Crawford, chairman of Bain’s global technology practice and lead author of the report.
Consumer-focused services, which includes subscriptions and advertising revenue, is seen to contribute $200 billion to $400 billion. This particular segment is widely acknowledged to be crucial for the industry as service providers continue to push AI-powered products to billions of users globally.
“New products and uses that don’t exist today will enable new markets and opportunities from abundant intelligence – these may include drug discovery, mental health and energy generation,” Bain said.
Bain forecasts that annual spending on AI infrastructure might hit $1.5 trillion by 2031. Those expenses include new facilities, higher capacity and upgrades to the installed base of GPUs, memory and networking equipment.
If those capital expenditures amount to about a quarter of industry revenue – “an ambitious but reasonable percentage based on trends among cloud providers” – sustaining this level of investment would require an AI market approaching $6 trillion annually, Bain said.
The artificial intelligence industry needs to become creative with new propositions to earn $6 trillion in annual revenue by 2031 and justify the capital being deployed for data centres, a new report from Bain and Company has shown.