AI Spending Faces A Trillion-Dollar Reckoning If Productivity Falls Short, MIT Says

MIT Technology Review highlights research by Jessica Wachter and Jonathan Wachter, who estimate that major tech companies like Alphabet, Microsoft, Amazon, Meta, and Oracle face a trillion-dollar reckoning in AI spending. Their analysis suggests a 2.7-fold productivity increase is needed by 2030 to justify investments, considering capital costs, depreciation, and a 15% return. The paper warns that if the anticipated AI boom doesn't materialize, this could lead to "the largest misallocation of capital in history."