Investment Rating - The report suggests a positive outlook for industries leveraging AI, indicating a strong growth potential and value creation through AI integration Core Insights - AI is enhancing worker productivity and creating value for companies, with job numbers and wages increasing in AI-exposed occupations [4][6][33] - The skills required for success in AI-powered jobs are changing rapidly, with a significant acceleration in the demand for new skills [5][66] - Industries most exposed to AI are experiencing three times higher growth in revenue per employee compared to those least exposed [6][21][103] Summary by Sections AI Impact on Productivity and Wages - Industries most able to utilize AI have seen a nearly quadrupled productivity growth since 2022, with revenue per employee growing three times faster than in less exposed industries [6][24][26] - Wages for AI-powered workers are rising two times faster in industries most exposed to AI compared to those least exposed [36][38][42] Job Creation and Transformation - Job numbers are growing in virtually all AI-exposed occupations, with a 38% growth in AI-exposed jobs over the past five years [50][56] - The nature of jobs is evolving, with many roles being reshaped to focus on higher-value tasks rather than being eliminated [104][105] Skills Evolution - The demand for skills is changing 66% faster in AI-exposed jobs compared to less exposed ones, indicating a rapid skills transformation [5][66] - Employers are increasingly prioritizing skills over formal degrees, reflecting a shift in hiring practices in AI-exposed fields [72][75] Business Implications - Companies are encouraged to treat AI as a growth strategy rather than merely an efficiency tool, focusing on enterprise-wide transformation [7][59] - Building trust in AI and its applications is critical for maximizing its potential and ensuring successful integration into business processes [10][70][107]

Investment Rating - The report does not explicitly provide an investment rating for the AI industry Core Insights - The AI Index Report 2025 highlights the rapid advancements and increasing integration of AI across various sectors, emphasizing its growing influence on society, the economy, and governance Research and Development - Industry continues to dominate AI model development, with nearly 90% of notable models in 2024 originating from industry, compared to 60% in 2023 [46] - China leads in AI research publication totals, producing 23.2% of AI publications in 2023, while the U.S. leads in highly influential research [47] - The total number of AI publications has nearly tripled from approximately 102,000 in 2013 to over 242,000 in 2023, with AI's share of computer science publications rising from 21.6% to 41.8% [48] - The U.S. produced 40 notable AI models in 2024, significantly surpassing China's 15 and Europe's three [49] - AI models are becoming larger and more computationally demanding, with training compute doubling approximately every five months [50] - The cost of querying AI models has dramatically decreased, with a more than 280-fold reduction in costs for models scoring equivalent to GPT-3.5 [51] - The number of AI patents has grown from 3,833 in 2010 to 122,511 in 2023, with China leading in total AI patents [52] - AI hardware performance has improved significantly, with costs dropping 30% annually and energy efficiency increasing by 40% [53] Technical Performance - AI performance on new benchmarks has improved significantly, with scores on MMMU and GPQA increasing by 18.8 and 48.9 percentage points, respectively [55] - The gap between open-weight and closed-weight models has nearly disappeared, with performance differences reducing from 8% to 1.7% [56] - The performance gap between U.S. and Chinese models has narrowed, with differences on major benchmarks shrinking to near parity [57] - The AI landscape is becoming increasingly competitive, with the Elo score difference between the top and 10th-ranked models decreasing from 11.9% to 5.4% [58] Responsible AI - The number of reported AI-related incidents rose to 233 in 2024, marking a 56.4% increase from 2023 [66] - Global cooperation on AI governance has intensified, with major organizations publishing frameworks focused on responsible AI principles [68] - The number of RAI papers accepted at leading AI conferences increased by 28.8%, highlighting the growing importance of responsible AI [74] Economy - Global private AI investment reached a record high of $252.3 billion in 2024, with private investment climbing 44.5% [75] - U.S. private AI investment hit $109.1 billion in 2024, nearly 12 times higher than China's $9.3 billion [77] - The proportion of organizations reporting AI use jumped to 78% in 2024, up from 55% in 2023 [78] - AI is beginning to deliver financial impacts across business functions, with 49% of organizations reporting cost savings in service operations [79] Science and Medicine - The number of FDA-approved AI-enabled medical devices surged to 223 by 2023, up from just six in 2015 [89] - AI's role in scientific discovery continues to expand, with significant advancements in protein sequencing and clinical knowledge [86][87] - AI-driven research received recognition through two Nobel Prizes awarded in 2024 for breakthroughs in protein folding and neural networks [94] Policy and Governance - U.S. states are leading in AI legislation, with the number of state-level AI-related laws increasing from one in 2016 to 131 in 2024 [95] - Governments worldwide are investing heavily in AI infrastructure, with Canada pledging $2.4 billion and China launching a $47.5 billion fund [96] - Mentions of AI in legislative proceedings increased by 21.3% across 75 countries in 2024 [97] Education - Two-thirds of countries now offer or plan to offer K–12 computer science education, with significant progress in Africa and Latin America [103] - The number of graduates with master's degrees in AI in the U.S. nearly doubled between 2022 and 2023 [104] Public Opinion - Global optimism about AI products and services has increased, with the share of individuals viewing AI as more beneficial than harmful rising from 52% in 2022 to 55% in 2024 [106]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The report emphasizes that AI, particularly generative AI like ChatGPT, has the potential to significantly enhance productivity across various sectors, thereby expanding economic opportunities for a broader population [2][3][9] - The rapid adoption of ChatGPT indicates a transformative impact on productivity, with nearly 28% of employed US adults using it at work, a significant increase from 8% in 2023 [11][19] - The report highlights the need for equitable access to AI technologies to ensure that the benefits of productivity gains are widely shared [36][37] Summary by Sections Introduction - The report discusses the "productivity imperative" faced by the world, noting that US labor productivity growth averaged 1.5% per year during the 2010s, which is lower than previous economic booms [9] Adoption of ChatGPT - ChatGPT is noted as the fastest-adopted consumer technology, reaching 1 million users in five days and 100 million users in two months, indicating a significant acceleration compared to past technologies [11][16] - The report states that 2.5 billion messages are sent daily on ChatGPT globally, with 330 million of those in the US, showcasing its extensive use [14][15] Use Cases of ChatGPT - The primary use cases for ChatGPT among US users include learning and upskilling (20%), writing and communication (18%), and programming/data science (7%) [20][21] - Younger users, particularly those aged 18-34, represent a significant portion of ChatGPT users, suggesting long-term economic benefits as they integrate AI into their careers [22] Sector-Level Productivity Gains - In sectors such as legal services, AI tools have increased productivity by 34% to 140% across various workflows [28] - Customer support roles have seen a 14% productivity increase when using AI tools, particularly benefiting less-skilled workers [29] - In education, teachers reported saving nearly six hours per week through AI assistance, equating to six extra teaching weeks per year [32] Entrepreneurship and New Work - The report highlights that AI lowers the costs of starting a business and enables faster scaling, with 40% of small businesses currently using AI [33][34] - The emergence of new roles and sectors due to AI is anticipated, potentially leading to further economic growth [35] Conclusion - The report concludes that the use of ChatGPT is already broad and impactful, acting as a force multiplier for human capital and innovation [36]

Contents 3 A Letter from Dan Dees 5 A Historic Paradigm Shift: AI Ushers In a New Era for Computing 10 The Power Imperative: Generational Opportunities and Challenges 17 Data Center Diplomacy: A New Tool for Geopolitical Influence 19 Meeting the Moment with Capital Solutions 24 Investment Banking Leadership and Contributors Dan Dees Co-Head of Global Banking and Markets Economic progress is rarely linear—throughout history, it's been punctuated by technology-driven inflections. The inexorable forces of fina ...

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The report highlights a historic paradigm shift driven by artificial intelligence (AI), which is expected to create new industries and transform the economy [6][19] - AI is projected to increase global data center power demand by 160% by 2030, necessitating innovative financing solutions and infrastructure development [9][38] - The convergence of compute and power is creating urgency for corporate leadership to strategically navigate the evolving landscape [10] Section Summaries A Historic Paradigm Shift: AI Ushers In a New Era for Computing - AI is rapidly advancing, fundamentally transforming industries and creating new opportunities [19] - The infrastructure required for AI workloads is significantly more complex and resource-intensive than previous computing paradigms [21] - Hyperscalers are expected to invest $1 trillion in AI technology by 2027, indicating a substantial expansion in capital expenditure [22] The Power Imperative: Generational Opportunities and Challenges - Data center power usage is expected to increase by 160% by 2030, driven by AI demands [38] - The aging US power grid poses a critical bottleneck for meeting this rising demand [39] - Utility companies are exploring new rate structures and partnerships to accommodate large-load customers like hyperscalers [45][46] Data Center Diplomacy: A New Tool for Geopolitical Influence - Data centers are becoming strategic assets for nations, allowing them to leverage infrastructure for geopolitical and economic advantages [71] - The flexibility in data center location enables countries to form strategic alliances and enhance competitiveness in the digital economy [73] Meeting the Moment with Capital Solutions - Global hyperscalers' capital expenditure reached approximately $800 million per day in 2024, reflecting the urgency of infrastructure needs [78] - Joint ventures and creative financing solutions are emerging to meet the unprecedented capital demands of the AI ecosystem [79][80] - The expected capital demand for digital infrastructure by 2030 is projected to be $2 trillion, highlighting the scale of investment required [80]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The 2025 State of AI report emphasizes the importance of building and operationalizing AI products as a competitive advantage, focusing on the practical aspects of developing AI-powered offerings [11][12] - The report identifies key dimensions of the builder's playbook, including product roadmap and architecture, go-to-market strategy, talent acquisition, cost management, and internal productivity [14] Summary by Sections Product Roadmap & Architecture - Best practices for balancing experimentation, speed to market, and performance during model evolution are discussed [14] - AI-native companies are more advanced in product development, with 47% of their products reaching critical scale [28][30] Go-to-Market Strategy - AI-enabled companies allocate 20-35% of their product roadmap to AI features, while high-growth companies dedicate 30-45% [66] - A hybrid pricing model is prevalent, combining subscription and usage-based pricing [69] People & Talent - Companies are increasingly hiring dedicated AI leadership as they scale, with 33% of companies having dedicated AI leadership by the time they reach $100M in revenue [86] - AI/ML engineers and data scientists are among the most sought-after roles, with hiring challenges primarily due to a lack of qualified candidates [90][92] Cost Management & ROI - Companies allocate approximately 10-20% of their R&D budget to AI development, with plans to increase this in 2025 [100] - The cost of AI infrastructure is a significant concern, with API usage fees being the most challenging to control [106] Internal Productivity & Operations - Internal AI productivity budgets are expected to nearly double in 2025, with companies spending between 1-8% of total revenue on AI [122] - Approximately 70% of employees have access to AI tools, but only about 50% use them regularly [129]

Investment Rating - The report indicates an "unprecedented" growth trajectory for the AI industry, suggesting a strong investment outlook for stakeholders involved in AI technologies and applications [5][11]. Core Insights - The pace of change in AI technology is accelerating significantly, with user adoption and revenue growth metrics showing a steep upward trend [5][24]. - The competition in the AI sector is intensifying, particularly between the USA and China, with both established tech companies and new entrants aggressively innovating and investing in AI [7][8][25]. - The report emphasizes the transformative impact of AI on various sectors, including work evolution, physical world applications, and global internet user engagement [22][25][30]. Summary by Sections 1. Change Acceleration - The report asserts that changes in AI are happening faster than ever, with a notable increase in user engagement and technological advancements [11][22]. 2. User and Usage Growth - AI user growth is described as "unprecedented," with ChatGPT reaching 800 million weekly active users in just 17 months, reflecting a growth rate of 8x [146][148]. 3. Capital Expenditure Growth - The capital expenditure (CapEx) by major technology companies in AI is projected to increase significantly, with estimates suggesting a rise to $212 billion by 2024, marking a 63% increase [13][14]. 4. AI Model Economics - The report highlights that while AI model compute costs are rising, inference costs per token are falling, leading to improved performance and increased developer usage [3][5]. 5. Monetization Challenges - The report identifies rising competition, open-source momentum, and China's advancements as key threats to AI monetization, necessitating strategic responses from companies [5][15]. 6. AI and Physical World Integration - The integration of AI into physical applications is described as fast and data-driven, indicating a rapid evolution in how AI technologies are applied in real-world scenarios [6][18]. 7. Global Internet User Growth - The report notes that global internet user growth is being powered by AI, with unprecedented levels of engagement and adoption across various demographics [6][7]. 8. Work Evolution - The evolution of work due to AI is characterized as real and rapid, with significant changes in job postings and the nature of IT roles in the USA [19][30].

Investment Rating - The report does not explicitly provide an investment rating for the industry or company. Core Insights - AlphaEvolve is an evolutionary coding agent that enhances the capabilities of state-of-the-art large language models (LLMs) for solving complex scientific and computational problems [1][3][5] - The agent autonomously improves algorithms through an iterative process, leading to significant advancements in algorithmic efficiency and novel discoveries [1][10][11] - AlphaEvolve has demonstrated its effectiveness in optimizing critical components of Google's computational infrastructure, including scheduling algorithms and hardware circuit designs [1][11][39] Summary by Sections Introduction - The report discusses the challenges of automating the discovery of high-value knowledge and the potential of LLMs to enhance this process [2][3] AlphaEvolve Overview - AlphaEvolve combines evolutionary computation with LLM-based code generation to tackle a wide range of scientific and engineering discovery problems [3][5] - It evolves entire code files rather than single functions, allowing for more complex algorithm development [8][9] Evaluation and Evolution Process - The evaluation mechanism is crucial for AlphaEvolve, enabling it to assess generated solutions automatically and iteratively improve them [12][32] - The evolutionary database helps balance exploration and exploitation, ensuring continuous improvement of the best programs while maintaining diversity [34] Results - AlphaEvolve has improved the state of the art for 14 matrix multiplication algorithms, notably discovering a rank-48 algorithm for multiplying 4 × 4 complex-valued matrices, a significant advancement after 56 years [40][41] - In mathematical research, AlphaEvolve rediscovered the best-known constructions in 75% of cases and surpassed existing solutions in 20% of cases across various mathematical domains [43][44]

Investment Rating - The report indicates a strong investment environment in the US venture capital sector, with a significant increase in funding, particularly in the AI sector, suggesting a positive investment rating for the industry overall [2][37]. Core Insights - US startups raised $85.5 billion in Q1 2025, marking a 95% year-on-year increase and the second-largest amount raised in a quarter on record [2][37]. - OpenAI's $40 billion funding round significantly influenced this capital-rich quarter, highlighting the dominance of AI in venture capital investments [2][39]. - The US venture capital investment is tracking ahead of all previous years, with a notable increase in late-stage investments driven by multi-billion dollar AI rounds [11][23]. Summary by Relevant Sections VC Investment Overview - In Q1 2025, 1,023 rounds of $2 million or more were raised by US startups, indicating a lower activity level in terms of the number of rounds compared to previous years [15]. - Early-stage VC has slowed slightly, while breakout-stage VC remains consistent with previous quarters [18][20]. Industry Performance - Enterprise Software led the sectors in VC investment in Q1 2025, with Health following closely behind when excluding OpenAI's funding [26]. - AI companies dominated the top funded segments, with six out of the top nine rounds being AI-related [8][29]. Regional Insights - The US accounted for over 50% of global energy tech financing in Q1 2025, the highest share in over five years [32]. - The Bay Area, Austin, and Seattle emerged as the fastest-growing US hubs for VC investment, with the Bay Area alone accounting for 68% of all US venture capital raised in Q1 2025 [42][44].

Investment Rating - The report does not explicitly provide an investment rating for the travel industry but highlights the importance of strong cash flow and technological investments for companies to thrive in an AI-driven landscape [9][50]. Core Insights - The travel industry is at a strategic crossroads in 2025, influenced by AI-driven revolution and four major forces: personalization and digital transformation, sustainability demands, blending of business and leisure travel ('bleisure'), and financial resilience through diversification [6][20]. - Generative AI (GenAI) is identified as a game-changer, transforming how consumers plan travel and interact with booking platforms [7][108]. - Companies with strong direct customer relationships and digital footprints are better positioned to benefit from AI advancements, while those reliant on search engine visibility face greater risks [13][106]. Summary by Sections Executive Summary - The report emphasizes the fusion of AI with authentic experiences as a key strategy for top companies to enhance customer loyalty and defend against disruption [5]. Major Forces Transforming Travel - The four interconnected forces reshaping the travel industry include digital personalization, sustainability demands, the rise of 'bleisure' travel, and the need for financial resilience [20][21]. Personalization & Digital Transformation - A significant 90% of travelers value personalization in trip planning, with companies like Marriott and Delta leveraging AI to enhance customer experiences [24][25]. - Successful hospitality providers integrate technology to elevate human experiences, ensuring that technology remains largely invisible to guests [26][28]. Sustainability and 'Eco-friendliness' - 78% of luxury travelers prefer companies with strong sustainability policies, indicating a mainstream demand for responsible tourism [33]. - Companies that effectively implement sustainability initiatives can gain a competitive edge, with evidence suggesting a willingness to pay a premium for sustainable practices [34][35]. 'Bleisure' Travel - The blending of business and leisure travel is becoming increasingly common, with 72% of corporate travelers extending business trips for leisure in 2023 [39]. - Companies can prepare by adopting flexible booking options and creating partnerships with local businesses to enhance the travel experience [44]. Financial Resilience and Diversification - The travel industry has shifted focus from "growth at any cost" to building financial buffers and diversifying revenue streams post-pandemic [46]. - Airlines generated over $102 billion from ancillary revenues in 2022, highlighting the importance of additional income sources [47]. Future Readiness by Sector - The Future Readiness Indicator 2025 ranks companies based on their ability to adapt and innovate, with Booking Holdings and Airbnb leading the rankings [75][76]. - Airlines show variability in performance, with Delta Air Lines recognized for its strong financial health and innovative practices [92][93]. AI's Transformative Impact - AI is reshaping competitive dynamics in the travel landscape, emphasizing the need for companies to maintain customer loyalty and direct engagement to thrive in an automated environment [105][106]. - The report highlights the potential for AI to disrupt traditional booking processes, making it essential for companies to adapt to these changes [118].