In a world where trillions of dollars are being poured into artificial intelligence (AI), the entire sector must generate enormous sums every year for the investment to pay off. According to an analysis by J.P. Morgan published on its website, the global AI industry would have to generate approximately $650 billion (about CZK 14.95 trillion) in new annual revenue forever just to achieve a 10% return on investment. This is not a forecast of future earnings, but rather the threshold AI must surpass for those enormous expenditures to make sense. The bank compares it to a situation in which every iPhone user paid an additional $35 (CZK 805) per year, or every Netflix subscriber paid $180 (CZK 4,140) – indefinitely.
These figures are based on estimates that total global investment in AI infrastructure will exceed $5 trillion over the next five years. J.P. Morgan emphasizes that a 10% return is a standard benchmark for investment attractiveness in the technology sector. If this cannot be achieved, these massive expenditures could end in disappointment for investors who are now pouring money into AI on a large scale.
Why such a high amount?
In its report, J.P. Morgan describes how AI infrastructure is becoming a massive business. Investments include everything from data centers and specialized chips to the energy sources that power it all. The bank expects these costs to rise rapidly – for example, due to growing demand for computing power to train AI models. For investors to earn a reasonable profit, revenue from AI products and services must not only cover these expenses but also provide that 10% return.
J.P. Morgan analysts point out that this $650 billion (CZK 14.95 trillion) is the "stark reality" for the entire sector. This means that if AI companies, such as those that manufacture chips or operate cloud services, fail to generate enough new revenue, the entire wave of investment could cause problems. The bank illustrates this with real-world examples: imagine Apple having to collect that additional amount from each of its billions of iPhone users, or Netflix from its hundreds of millions of subscribers.
Impact on investors
For the average person, this means that the AI boom is not just about cool gadgets and smart assistants, but also about hard economics. J.P. Morgan warns that without this level of revenue, AI investments could perform worse than expected. The bank notes that global demand for computing power remains "astronomical," driving these expenditures higher. For example, data centers and AI infrastructure consume enormous amounts of energy and resources, increasing overall costs.
This analysis serves as a warning to investors: AI must deliver revolutionary products that people and businesses will be willing to pay for if the investment is to pay off. J.P. Morgan emphasizes that this is a quantitative challenge – not whether AI will fail, but whether it can grow fast enough to cover the trillions of dollars invested.
For a layperson, it is important to understand that these figures affect the prices we pay for these technologies. If AI companies need to generate these sums, new fees may appear in apps, services, or devices. J.P. Morgan puts this into context using iPhones and Netflix to make it easier to understand: imagine your monthly Netflix subscription increasing by an amount equivalent to $180 per year solely because of AI costs.
Sources: tomshardware.com and jpmorgan.com
