Artificial intelligence: A real game changer

After decades of development, machines that think, learn and create are transforming the economy, the markets and our lives

ARTIFICIAL INTELLIGENCE (AI) HAS RIDDEN WAVES of public excitement, skepticism and fear since the 1950s.1 When ChatGPT — a language-processing chatbot capable of synthesizing reams of information and generating human-like text in response to queries — became widely available to consumers for the first time in late 2022, it was immediately apparent that a tipping point had been reached.

 

Just ask ChatGPT. Here’s the response we got when we questioned whether all the hype around AI is justified: AI “has huge potential and is making meaningful progress, but it’s important to balance the excitement with a realistic understanding of where the technology is and where it's heading.”

 

Human observers agree. “AI is transforming the global economy as electricity and the steam engine did in their own times,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. Below, Hyzy and Haim Israel, head of Thematic Investing for BofA Global Research, discuss the economic and market implications of the AI revolution.

 

Why is this finally AI’s breakthrough moment?

Chris Hyzy, Chief Investment Officer, Merrill and Bank of America Private Bank says “AI is transforming the global economy as electricity and the steam engine did in their own times.”

Put simply, it’s a marriage of technology and need. “More data is created in a single hour today than in an entire year two decades ago,” says Israel. “Until recently, AI could read and write but not understand content. That’s rapidly changed,” he explains. The onset of generative AI (GAI) systems such as ChatGPT enables machines to understand human language and produce human-like dialogue and content.

 

GAI systems are capable of generating new text, images and other media — think research reports, news items, speeches, poems, songs, videos, computer programs, you name it — from existing data. This technological leap has created an “iPhone moment” for AI, making its services available to billions of people through a growing array of commercial uses, says Israel.

 

How will generative AI change the economy?

“As the technology improves, expected benefits include higher productivity, cost efficiencies, as companies increasingly turn to GAI for content creation, software development, marketing and sales, and customer service,” Hyzy says. These capabilities will likely cut across industries and change the experiences of consumers as well as companies, he adds.

 

Graphic depicting statistics that reflect the growth of AI. Visit link below for a full description.

Sources, from left to right: Similarweb, “ChatGPT’s First Birthday is November 30: A Year in Review,” November 15, 2023BofA Global Research, “Me, Myself and AI — Artificial Intelligence Primer,” February 28, 2023; IDC as of May September 20242025; and PwC UN as of September 2017April 2025.

Global IT spending associated with AI software, hardware and services will likely reach $1.26 trillion by 2029, compared with $316 billion in 2024.2 According to some estimates, AI will reach $4.8 trillion in global market value by 2033.3“Funding for AI development is pouring in from corporate and individual investors, as well as governments,” Israel adds.

 

What geographic regions and economic sectors are likely to benefit the most?

“The U.S. and China, already the world’s two largest economies, are likely to experience the greatest economic gains from AI,” Israel says. Together, China and North America will account for about 70% of the global economic impact of AI by 2030. In fact, PwC has estimated that AI will boost the GDP of China by 26.1% by 2030, and the combined GDPs of North American countries by 14.5%.4

 

Among sectors and industries, information technology should be a clear winner, with software development, semiconductors, data centers, cybersecurity, search engines and more expected to derive benefits. “Beyond software, major infrastructure upgrades will be needed to support the massive flow of information,” Hyzy says. Industries ranging from education and healthcare to aerospace and the law should also be transformed, Israel adds. In pharmaceuticals, “AI can help screen new drug compounds to predict their success rates, or identify the right candidates for drug trials,” he says. In the law, “AI can write legal documents and summarize cases.”

 

Haim Israel, head of Thematic Investing for BofA Global Research says “Until recently, AI could read and write but not understand content. That’s rapidly changed.”

Is AI likely to disrupt the labor market?

As with any major technological shift, the onset of AI is bound to shake up some professions and may eliminate some occupations. In the past, such shifts have mainly eliminated manual jobs, such as production-line manufacturing. What’s different this time is that AI is capable of handling many tasks associated with higher-end professions. “But predictions of wholesale job losses may be overblown,” Hyzy believes. “Advancements typically don’t just eliminate some jobs; they create whole new industries, businesses, skill sets and careers.”

 

What other potential risks does AI pose?

ChatGPT, when asked if AI poses a threat to humanity says “The challenge is ensuring that AI benefits everyone, reduces inequalities and doesn’t lead to unintended consequences.”

The widespread accessibility and use of ChatGPT and other GAI systems dramatically increase the risks of cyberattacks and fraud, Israel notes. As technology gets better at adopting human language and creating images, the risks of identity theft, for example, have only risen. The technology also presents new challenges in terms of privacy, as powerful AI systems have unprecedented ability to collect, use and potentially misuse data about private individuals.

 

In January 2025, the Federal Trade Commission issued a report highlighting concerns around partnerships and investments involving generative AI companies.5 In September 2025, it launched an investigation into the potentially harmful effects of AI-powered chatbots on children and teens.6 But effective market regulation and safety guidelines may be beyond the power of human security experts —  in other words, AI may be needed to erect barriers against AI. Other challenges: protecting intellectual property rights as AI reads and adapts existing text and images. And AI creators will also have to work hard to eliminate cultural biases from creeping into programs, Israel says.

 

How could investors benefit?

The promise of AI helped to lift markets in 2023 and 2024. But investors may now need to invoke a quality not normally associated with rapid advancements: patience. “While the technology will surely accelerate, we are still in the early stages with GAI and other forms of AI,” Hyzy says. Diversification, a good idea for any investor, is especially important for those considering new technologies.

 

As for larger questions of AI’s potential threat to humanity, the technology itself offers a cautionary perspective. Asked if humans should worry about AI taking over the world, ChatGPT responded, “It’s less about fearing AI ‘taking over’ and more about ensuring that we develop it responsibly, with the right safeguards in place. A big part of the challenge is ensuring that AI benefits everyone, reduces inequalities and doesn’t lead to unintended consequences.”

 

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1 IBM, “The History of Artificial Intelligence,” October 21, 2024.

2 IDC, “Artificial Intelligence Infrastructure Spending to Surpass the $200Bn USD Mark in the Next 5 years,” February 18, 2025.

3 UN Trade and Development, “AI’s $4.8 trillion future: UN Trade and Development alerts on divides, urges action,” April 7, 2025.

4 Enterprise Technology Association, “Economic Impact and Projections Report: The Integration of AI and Emerging Technologies (2025–2030),” accessed September 2025.

5 Federal Trade Commission, “FTC Issues Staff Report on AI Partnerships & Investments Study,” January 17, 2025.

6 Federal Trade Commission, “FTC Launches Inquiry into AI Chatbots Acting as Companions,” September 11, 2025.

 

BofA Global Research is research produced by BofA Securities, Inc. (“BofAS”) and/or one or more of its affiliates. BofAS is a registered broker-dealer, Member SIPC, and wholly owned subsidiary of Bank of America Corporation.

 

The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).

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