🎈 Up Big Today: Find today's biggest gainers with our free screenerTry Stock Screener

UBS sees AI revenue rising from $28B in 2022 to $420B in 2027

Published 01/03/2024, 06:54 AM
Updated 01/03/2024, 06:56 AM
UBS sees AI revenue rising from $28B in 2022 to $420B in 2027
US500
-

The year 2023 saw the largest US technology stocks, often referred to as the "Magnificent seven," outshining the broader market, with gains ranging from 48% to an impressive 249%, while the S&P 500 Index closed with a 24.2% price return.

Notably, many of these companies play pivotal roles in the advancement and widespread application of artificial intelligence (AI). As investors contemplate the sustainability of 2023's AI-driven successes in 2024, UBS remains optimistic about the enduring investment case for AI and related entities.

While concerns may arise regarding potential headwinds, such as a slower practical implementation of AI or a strategic shift in investor portfolios away from the previous year's leaders, UBS believes that the investment outlook for AI will not only persist but also strengthen in 2024.

The integral role of these technology giants in the ongoing development and dissemination of AI positions them favorably to continue driving innovation, efficiency, and profitability in the evolving landscape of the tech sector.

“When we launched our AI industry revenue estimates last year, we expected growth from USD 28bn in 2022 to USD 300bn by 2027. That translated into a compounded annual growth rate of 61%,” said the Chief Investment Officer Americas at UBS.

“But we now upgrade our estimate further, with the greatest risk being that we are too conservative. We now forecast industry revenues of USD 420bn by 2027— a 72% annual growth rate and a fifteenfold increase in just five years.”

Analysts argue that the potential factors influencing the 15x growth in AI revenues from 2022 to 2027 are a demand for AI that exceeds initial expectations and improved transparency regarding company expenditures on AI infrastructure.

While these numbers may appear ambitious, they align with historical trends seen in earlier phases of the computing cycle, including mainframe, PC, and smartphone shipments.

“When it comes to expressing these views in portfolios, we believe the semiconductor and software industries (with a combined market cap of more than USD 10tr) are the best ways to ride the strong and improving visibility for AI,” analysts added.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.