AI industry needs to earn $6 trillion by 2031 to justify data centres

To justify the investment in data centres worldwide, the global artificial intelligence industry must reach $6 trillion in annual revenue by 2031, according to consulting firm Bain. Existing AI services for consumers and businesses could generate $1.8 trillion of this revenue, leaving $4.2 trillion to be created through new revenue streams, the firm said in its annual global technology report on Tuesday.

The shortfall will likely stem from nascent sectors like autonomous machines, robotics, drug discovery, mental health, and energy generation. Bain's lead author, David Crawford, emphasized the need for a wave of innovation comparable to the impact of mobile and cloud technologies. He stated that AI infrastructure is being built ahead of demand, and sustaining this growth will require adding about 1% to the annual global GDP growth rate.

The report highlights the challenges in making AI development sustainable. Major tech companies, including Microsoft, Alphabet's Google, Amazon, Meta Platforms, and Oracle, are investing billions in data centres to meet AI's growing demand for computational resources. Data centre sizes and costs are doubling roughly every 12 to 16 months, partly due to rising prices for chips from Nvidia and SK Hynix, as well as networking equipment and other components.

As debate intensifies over the elusive returns for AI service providers, critics raise concerns about an interconnected web of dependencies between technology manufacturers and AI developers, fueling lofty expectations that demand even larger investments.

While discussions today focus on employee productivity, Bain projects that the economics of AI infrastructure will require trillions in new revenue beyond productivity gains by 2031. The consultancy predicts data centre spending could reach $5 trillion to $6.5 trillion by 2030, adding at least 150 gigawatts of capacity, which will strain countries' energy resources.

Currently, data centre developers face shortages in transformers, water, and power supplies, and face fierce local opposition that has blocked or delayed $68 billion worth of projects in the US during the June quarter.