Analysis: Most businesses plan to increase AI investment despite uncertain ROI

As artificial intelligence moves from technological novelty to business necessity, Morgan Stanley‘s latest analysis reveals a stark contrast between AI’s current development phase and its anticipated revenue potential. Their projections suggest that while enterprises are still fine-tuning AI implementations today, the technology is poised for significant monetization starting in 2025, marking a crucial transition from development to widespread commercial adoption.

The big picture: Morgan Stanley Research forecasts generative AI revenue to surge from $45 billion in 2024 to $1.1 trillion by 2028, with enterprise software accounting for roughly $400 billion of that total.

Key timeline details: The AI innovation cycle has followed three distinct phases:

• The pre-November 2022 period focused on fundamental research in transformer models.
• The current development phase, initiated by ChatGPT‘s release, centers on building AI capabilities and infrastructure.
• 2025 is expected to mark the beginning of significant market uptake and revenue generation.

Behind the numbers: The projected $1.1 trillion revenue by 2028 reflects massive market capitalization gains, with major tech companies already adding over $9 trillion in value since ChatGPT’s debut.

Technical challenges: AI’s computational demands present significant scaling hurdles.

• Training and inference require extensive GPU/XPUS clusters.
• Cost-effectiveness remains a key concern for widespread deployment.
• Infrastructure scaling continues to pose challenges for enterprise adoption.

Where we go from here: The next three years could reshape traditional business models.

• 2025 will likely focus on demonstrating concrete AI productivity gains.
• Software pricing may shift from seat-based to transaction-based models.
• Breakthrough technologies could fundamentally transform business processes.

Why this matters: This transition from development to monetization represents a critical juncture for investors and enterprises, potentially separating AI’s early adopters from those who risk falling behind in the technological revolution.