Business News | AI Needs $ 760 Billion in Annual Profit to Justify $ 7 Trillion Infrastructure Investment by 2030: McKinsey
Get latest articles and stories on Business at LatestLY. Artificial Intelligence (AI) infrastructure investments are estimated to reach USD 7 trillion by 2030, requiring the technology to generate around USD 760 billion in annual profit pools to justify the scale of spending, according to a report by McKinsey & Company.
New Delhi [India], October 21 (ANI): Artificial Intelligence (AI) infrastructure investments are estimated to reach USD 7 trillion by 2030, requiring the technology to generate around USD 760 billion in annual profit pools to justify the scale of spending, according to a report by McKinsey & Company.
The report said that as AI enters a new phase, the focus is shifting from what the technology can do to how businesses can use it to generate real economic value.
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While new AI businesses, products and services will contribute to returns, a significant share of the value will need to come from companies redesigning their work processes and improving productivity.
However, many organisations are still measuring AI adoption rather than its financial benefits. Companies track the number of AI users, copilots deployed and tokens consumed, but these measures do not establish whether the technology is generating economic value.
It stated, “By 2030, an estimated $7 trillion in capital will have been invested into AI infrastructure; to justify that investment, the technology needs to generate roughly $760 billion in annual profit pools”.
The report noted that businesses are increasingly facing the challenge of rising AI costs and need to determine where the technology can perform tasks at an acceptable level of quality and at a sustainable cost.
To assess this, McKinsey developed an analytical tool called the AI value curve, which examines the economics of using AI to automate or support existing work. It compares the cost of completing a task through current methods with the full cost of performing it using AI.
The calculation includes model and token expenses, along with the cost of human review, validation and rework needed to ensure acceptable results. AI can create productivity value when the resulting workflow delivers the required quality at a lower effective cost than the existing process.
Based on its analysis, the report estimated that the annual global economic opportunity from transforming work through AI automation or augmentation stands at USD 2.52 trillion.
The report also found that some of the strongest economic benefits could come from using AI to support highly skilled, higher-wage professionals, rather than focusing only on automating large volumes of routine work.
By taking over or supporting certain tasks, AI could allow professionals to spend more time on work requiring expertise and judgement.
The report said the combination of large volumes of work that can be automated or supported and high-value professional roles creates significant opportunities across different sectors.
Healthcare, education and government, for instance, could have similar value-creation potential to financial services and technology, according to the report.
However, the economic benefits of AI are not the same across all countries. The report noted that differences in labour costs can change the financial case for using AI, meaning a task that is cost-effective to automate in one market may offer a smaller benefit or even cost more in another.
The report said businesses therefore need to assess AI opportunities based on local economic conditions and the full cost of deploying the technology. (ANI)
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