{"id":5446,"date":"2025-09-24T17:11:27","date_gmt":"2025-09-24T17:11:27","guid":{"rendered":"https:\/\/musictechohio.online\/site\/deutsche-bank-grim-warning-ai-industry\/"},"modified":"2025-09-24T17:11:27","modified_gmt":"2025-09-24T17:11:27","slug":"deutsche-bank-grim-warning-ai-industry","status":"publish","type":"post","link":"https:\/\/musictechohio.online\/site\/deutsche-bank-grim-warning-ai-industry\/","title":{"rendered":"Deutsche Bank Issues Grim Warning for AI Industry"},"content":{"rendered":"
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Economists keep warning<\/a> that the US economy is being propped up almost entirely by an enormous boom in the tech and AI sector. Should the rest of us be worried?<\/p>\n

Multibillion-dollar investments have become the norm as AI companies continue to double down on enormous infrastructure buildouts<\/a> and talent acquisitions<\/a> that they insist will undergird a new economy in which huge amounts of human labor are automated away.<\/p>\n

In a new research note, as Fortune<\/em> reports<\/a>, the international finance giant Deutsche Bank is warning that AI spending can\u2019t continue to increase exponentially. And if spending were to slow down without realizing the tech\u2019s outsize promises, the analysts caution, it could reveal an economy in tatters \u2014 marked by unemployment, lower household incomes, and inflation<\/a> \u2014 that had been hidden by an irrational optimism in the power of AI.<\/p>\n

\u201cAI machines \u2014 in quite a literal sense \u2014 appear to be saving the US economy right now,\u201d Deutsche Bank head of FX Research George Saravelos wrote to clients. \u201cIn the absence of tech-related spending, the US would be close to, or in, recession this year.\u201d<\/p>\n

Current growth is also \u201cnot coming from AI itself but from building the factories to generate AI capacity,\u201d he added, suggesting that the tech industry is selling a still-hypothetical future rather than delivering a real one.<\/p>\n

It\u2019s true that investment in AI has reached a fever pitch lately. Earlier this week, AI chipmaker Nvidia announced<\/a> that it\u2019s pouring $100 billion into OpenAI as part of a \u201cstrategic partnership\u201d to \u201cbuild and deploy at least ten gigawatts of AI datacenters\u201d \u2014 a deal that critics immediately slammed<\/a> as self-serving.<\/p>\n

\u201cIt may not be an exaggeration to write that NVIDIA \u2014 the key supplier of capital goods for the AI investment cycle \u2014 is currently carrying the weight of US economic growth,\u201d Saravelos argued.<\/p>\n

\u201cThe bad news is that in order for the tech cycle to continue contributing to GDP growth, capital investment needs to remain parabolic,\u201d he concluded. \u201cThis is highly unlikely.\u201d<\/p>\n

He\u2019s right to be concerned. Total AI spending has contributed more to the growth of the US economy<\/a> this year than\u00a0all of consumer spending\u00a0combined.<\/p>\n

Especially alarming is the amount of money the AI industry would need to actually make to justify all its spending. According to a new report<\/a> by global management consulting company Bain & Company, it\u2019d need a whopping $2 trillion in annual revenue to \u201cfund computing power needed to meet anticipated AI demand by 2030.\u201d<\/p>\n

\u201cHowever, even with AI-related savings, the world is still $800 billion short to keep pace with demand,\u201d the report reads.<\/p>\n

Others remain more optimistic, with Goldman Sachs arguing that productivity gains thanks to AI adoption could ultimately boost the economy, according to a note to clients seen by Fortune<\/em>.<\/p>\n

However, reality has often been messier than those predictions. Earlier this year, MIT researchers found that a staggering 95 percent<\/a> of attempts to incorporate generative AI into business so far are failing to drive rapid revenue growth. Researchers have also found<\/a> that employees are actually being slowed down by AI \u201cworkslop\u201d that needs to be fixed by a human with common sense.<\/p>\n

In other words, it\u2019s no wonder economists are warning that over-relying on a comparatively tiny number of extremely highly valued tech companies for growth could eventually leave the US economy exposed if the AI industry\u2019s most wild and self-serving predictions don\u2019t come true.<\/p>\n

\u201cThe bottom line is once again that there is an extreme degree of concentration in the S&P 500, and equity investors are dramatically overexposed to AI,\u201d Apollo chief economist Torsten Sl\u00f8k wrote in a note<\/a> last week.<\/p>\n

More on the AI bubble:<\/strong> The AI Bubble Bursting Would Actually Be Incredible for the Economy, Economist Says<\/em><\/a><\/p>\n

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The post Deutsche Bank Issues Grim Warning for AI Industry<\/a> appeared first on Futurism<\/a>.<\/p>\n<\/div>\n

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