GenAI Revenue to Skyrocket Past $1 Trillion by 2028

Generative AI (GenAI) revenue is projected to surge from $45 billion in 2024 to $1.1 trillion by 2028, with companies expected to see positive returns as early as 2025, boasting a 34% profit margin. Semiconductor spending for GenAI is forecasted to climb from $115 billion in 2024 to $280 billion in 2028, while investments in hardware, networking, and memory are set to nearly triple to $276 billion. Corporate spending on automation software could generate $400 billion, while consumer platforms like ecommerce and AI-driven services may contribute $680 billion.

By 2025, revenue is expected to reach $153 billion, split between enterprise software and consumer platforms. Call centers are already leveraging GenAI to reduce costs, demonstrating its efficiency. AI models require exponentially more computing power, driving demand for advanced hardware solutions. Despite some efficiency improvements, major tech firms continue expanding their GenAI infrastructure investments. Analysts affirm that GenAI is not a speculative bubble but rather a long-term, high-return technology shift that will redefine industries.

GenAI Revenue to Skyrocket Past $1 Trillion by 2028

Generative AI (GenAI) revenue is set to experience explosive growth, projected to increase more than 20-fold in the next three years, with software and internet companies expected to see profitable returns by 2025. According to Morgan Stanley Research, GenAI revenue is forecasted to reach $1.1 trillion by 2028, a significant jump from $45 billion in 2024. The rapid adoption of GenAI is expected to drive a 34% profit margin by 2025, signaling the technology’s financial viability. Semiconductor spending for GenAI is also on the rise, projected to hit $280 billion by 2028, while investment in hardware, networking, and memory is anticipated to nearly triple, reaching $276 billion from $98 billion in 2024.

Keith Weiss, Head of U.S. Software Research at Morgan Stanley, emphasizes that businesses are now ready to integrate GenAI solutions as they continue to demonstrate effectiveness. The mainstream adoption of GenAI accelerated with the launch of ChatGPT in late 2022, followed by a surge of commercial applications in 2023. Initially, the financial prospects of GenAI were uncertain, but advancements in infrastructure and product development have provided clearer revenue projections. By 2028, corporate investments in automation software are expected to contribute $400 billion, while consumer platforms—including ecommerce, search, social media, and autonomous technologies—could generate $680 billion.

Morgan Stanley predicts that 2025 will be the first year of positive ROI for GenAI, with a 34% contribution margin, equating to $51 billion in profits. By 2028, ROI is expected to rise to 67%, generating $722 billion in returns. Brian Nowak, Head of U.S. Internet Research, highlights that GenAI’s financial performance is becoming comparable to current software and internet margins.

A key indicator of GenAI’s efficiency is its impact on labor cost reduction, particularly in customer call centers, where automation has significantly decreased reliance on human operators. Weiss asserts that cost savings from GenAI will drive broader adoption, not only improving existing workflows but also transforming business operations over the next three years.

One of the biggest challenges in GenAI’s growth is hardware availability, as more advanced AI models demand substantially greater computational power. Joe Moore, Head of U.S. Semiconductors Research at Morgan Stanley, explains that an AI model with just a 10% improvement in intelligence could require five times the computing power, leading to major increases in hardware investment. Despite efforts to optimize AI models, leading tech companies are continuing to expand their hardware budgets, with GenAI semiconductor spending expected to surge from $115 billion in 2024 to $280 billion in 2028. Similarly, hardware, networking, and memory investments are set to nearly triple from $98 billion to $276 billion.

Weiss concludes that GenAI is not a speculative bubble but a strategic, high-return investment, as companies continue funding areas where GenAI delivers tangible economic benefits.