UBS said in a report released on Tuesday that the technology industry has just begun a massive growth cycle and that the widespread use of artificial intelligence across economies will make it a $225 billion market by 2027. That's a huge jump from $2.2 billion in 2022 and marks a compound annual growth rate of nearly 152%.
UBS expects revenue from the AI industry to grow 15-fold, from $18 billion in 2022 to $420 billion in 2027. This forecast is a 40% increase from UBS's previous forecast. UBS researchers acknowledged that previous forecasts may have been too conservative.
Stronger-than-expected demand will drive the development of artificial intelligence software, driving the application field to a compound annual growth rate of 138%.
At the same time, increased spending on AI infrastructure will also help the tech industry's multi-year momentum. The segment is expected to grow from US$25.8 billion in 2022 to US$195 billion in 2027.
"This could make artificial intelligence one of the fastest-growing and largest areas of global technology and arguably the 'tech theme of the decade' as we have not seen similar growth in other areas of technology," UBS said.
The biggest beneficiaries of increased spending in 2024 will be hardware chips and GPUs used to train and run artificial intelligence. This will provide semiconductor and platform companies with a tenfold increase, helping industry revenue surge from $15.8 billion to $165 billion.