In this wave of AI frenzy, tech giants have reaped trillions of dollars in market cap growth, but the massive investment in AI has raised concerns among investors about its ROI.

Morgan Stanley's latest report on Wednesday pointed out that 2025 will become the year of generative AI (GAI).ROIThe turning point where ROI goes from negative to positive, and by 2028 this technological revolution is expected to generate over 1 trillion dollars in revenue.

Since the launch of ChatGPT in November 2022, the total market cap of the Mag7 tech giants has soared by 9.2 trillion dollars, an increase of 118% (compared to the S&P 500's 47% increase during the same period). This surge largely reflects investors' expectations for a new cycle of AI technology.

However, the skepticism has never ceased:$NVIDIA (NVDA.US)$The revenue from the Datacenter GPU Business has reached 83 billion USD in the past 12 months, with enterprises splurging 0.5 million USD per AI Server each year. When will the massive spending transform into real revenue, especially as global demand for Electrical Utilities is expected to double to 180 GW in four years?

2025 may welcome the ROI threshold, and AI revenue is expected to surpass one trillion dollars in 2028.

Morgan Stanley stated that after considering the overall benefits brought by AI in the enterprise Software and Consumer Internet markets, the ROI of generative AI will turn positive by 2025.

Morgan Stanley's model predicts that generative AI will generate $153 billion in revenue by 2025:

Of this, 59 billion comes from the improvement of enterprise Software productivity, with the potential productivity impact of generative AI solutions on the USA labor market at 3.3 trillion USD; 94 billion is driven by the increase in conversion rates in E-Commerce, rising advertising revenues, and income from wearable devices, with generative AI search queries and social generative AI generating 56 billion USD in revenue on Meta, YouTube, TikTok,$Pinterest (PINS.US)$Snapchat and$Reddit (RDDT.US)$on.

On the expenditure side, capital spending in Semiconductors and non-chip Datacenters is expected to reach $302 billion,

$128 billion will be invested in Hardware, networking, cooling, memory, and other Datacenter investments, while $174 billion will be spent on Semiconductors, including GPU/ASIC sales. The annual cost of operating this infrastructure is expected to be $102 billion, comprising $77 billion in depreciation, $23 billion in Electrical Utilities costs, and $2 billion in labor costs.

In summary, Morgan Stanley stated that:

A gross margin of 34% marks the Industry's formal breakthrough of the breakeven point, and generative AI is expected to create $51 billion in returns by 2025.

In 2028, AI revenue is expected to surpass one trillion.

Looking ahead to 2028, Morgan Stanley stated that total revenue from generative AI is projected to approach 1.1 trillion USD.

Among them, enterprise software will contribute 401 billion USD, while the potential productivity impact of generative AI solutions on the USA labor market is estimated at 6.4 trillion USD; consumer Internet-related spending will contribute 683 billion USD, with generative AI improvements in efficiency amounting to 469 billion USD and generative AI advertising revenue totaling 197 billion USD.

Morgan Stanley predicts that capital expenditure on generative AI will reach 556 billion USD by 2025, with semiconductor expenditure at 280 billion USD and non-chip datacenter-related expenditure at 276 billion USD. Overall, by 2028, monetization of generative AI could generate an estimated 722 billion USD in returns before deducting sales and marketing, R&D, and other expenses, with ROI expected to rise to about 67%.

In addition, several technology giants are expected to benefit from the AI wave:

$Microsoft (MSFT.US)$The Azure AI services and Copilot toolkit have formed an annual revenue scale of 13 billion USD, expected to expand to 78 billion by 2028; Amazon can leverage a 4.5% increase in GMV for every 10% improvement in conversion rate with its retail algorithm upgrades; Meta's AI content engine could contribute an additional 101 billion USD to its revenue by 2028.

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Editor/Jeffy