UBS expects A.I revenue environment to grow 15x over next five...

UBS expects A.I revenue environment to grow 15x over next five years. Majority of revenue is still in infrastructure and products are still in breakthrough mode but the growth in demand for A.I is going to be explosive.

UBS expects AI revenues to grow 15 times in span of five years

Jan 4, 202402:00 GMT+11

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UBS EXPECTS AI REVENUES TO GROW 15 TIMES IN SPAN OF FIVE YEARS
UBS Global Wealth Management has lifted its revenue growth forecast for the global AI industry by 40%, driven by higher infrastructure spending and growing demand, and expects the sector's revenues to grow 15 times in just five years.
The brokerage forecasts AI industry revenues to rise from $28 billion in 2022 to $420 billion in 2027, which translates to a 72% compound annual growth rate (CAGR). It earlier expected revenues to grow to $300 billion in 2027, or a 61% growth rate.
"This will likely make AI one of the fastest-growing and largest segments within global tech," argues Sundeep Gantori, equity strategist at UBS Global Wealth Management.
"We don't see similar growth profiles elsewhere in tech," he adds.
Tech S5INFT was the top performing sector in the S&P 500 SPX index, returning 56.4% last year.
Gantori believes that AI will remain a key theme driving global tech stocks again in 2024 and the rest of the decade. He expects semiconductor and software companies as well positioned to "ride the AI wave" and likely posting profit growth and operating margins of more than 30%.
UBS is confident in strong end-demand for AI products, due to improving visibility on the infrastructure segment and broadening demand for AI applications and models.
For AI infrastructure, it forecasts the segment to grow at 50% growth rate to $195 billion by 2027.
(Roshan Abraham)