AI progress requires $500B yearly investment, but firms will fall drastically short
Technology companies must invest at least $500 billion a year to meet the increasing need for computing power, translating into $2 trillion in annual revenue. However, they’re going to fall short – by a lot.
“If companies shifted all of their on-premise IT budgets to cloud and also reinvested the savings anticipated from applying AI in sales, marketing, customer support, and R&D (estimated at about 20% of those budgets) into capital spending on new data centers, the amount would still fall $800 billion short of the revenue needed to fund the full investment,” consultancy firm Bain & Co. estimated.
The analysis suggests that the total global compute requirements could reach 200 gigawatts by the end of the decade. In the US, demand could reach 100 gigawatts, which would in turn increase electricity needs.
Algorithmic improvements and technological breakthroughs, such as stable quantum computers, could partly solve the issue by reducing the burden on computing and power.
According to the Bain & Co. Global Technology Report 2025, released on Tuesday, it will be difficult to build data centers fast enough for various reasons, such as the limited supply of data center equipment. It’s also a highly regulated industry, so “bringing new power generation, transmission, and distribution online in a highly regulated industry can take four years or longer.”
“While no single issue will solve this deep challenge, innovation, government support, and efficient markets are all factors that could help close the gap. AI has the potential not only to improve productivity but also to spur the development of new businesses and revolutionary technological advancements in areas as diverse as drug discovery, autonomous vehicles, and logistics,” the report reads.
Experts warned that the general process of AI adoption could slow down if markets and governments fail to see the potential benefits.
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