Following the second-quarter earnings season, it should be clear to investors that the disruptive transformational changes and advancements being brought about by the implementation of artificial intelligence (AI) are not some one-off, or temporary paradigm shift that has a half-life of 12-18 months.
The hyperscalers that include Amazon Web Services (NASDAQ: AMZN), Microsoft Azure (NASDAQ: MSFT), Meta Platforms (NASDAQ: META), Google Cloud Platform (NASDAQ: GOOGL), Apple (NASDAQ: AAPL), Alibaba Cloud (NYSE: BABA), Tencent Cloud (OTCPK: TCEHY), Huawei, IBM (NYSE: IBM), Oracle (NYSE: ORCL), Tik Tok and others, will spend the most investment capital of all time on this technological revolution.
Even after these companies reported record sales and earnings attributed to AI-driven revenues, many on Wall Street and among investment and market professionals remain skeptical of the spending wave of future AI infrastructure. Therefore, it stands to reason that investors should source one of the soundest authorities in the business of research that covers the most extensive areas of technology.
In a recent report released on Aug. 27, IDC stated that worldwide spending on artificial intelligence is forecast to reach $632 billion in 2028. “Worldwide spending on artificial intelligence (AI), including AI-enabled applications*, infrastructure, and related IT and business services, will more than double by 2028, when it is expected to reach $632 billion,” according to a new forecast from the International Data Corporation (IDC) Worldwide AI and Generative AI Spending Guide. “The rapid incorporation of AI, and generative AI (GenAI) in particular, into a wide range of products will result in a compound annual growth rate (CAGR) of 29.0% over the 2024-2028 forecast period.”
Eric Schmidt, co-founder of Schmidt Futures, and former CEO of Google, stated, “I’m talking to the big companies and the big companies are telling me that they need $10 billion, $20 billion, $50 billion, $100 billion.” Schmidt said OpenAI’s Sam Altman told him it’s going to take $300 billion to build out the required AI infrastructure. So, the AI train is not even close to reaching the next station. If forecasts are accurate, then investors have another 3-4 years of potential outsized returns for the best-of-breed stocks that are leading the capital investment wave, but more importantly, for those companies providing the infrastructure for the ongoing buildout of AI.
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