PERSPECTIVES Special | October 2026 - AI and economic growth: Waiting for the productivity dividend
The current AI boom might be the first chapter of a much broader economic story, with investment and capital deepening currently the main drivers. Over time, productivity gains could become increasingly important, broadening the benefits across the economy and equity markets.
Key takeaways
Conclusion and risks
Three factor economic growth models still provide a useful way to assess the impact of artificial intelligence
AI will influence all three channels driving growth – capital, labour and productivity – but over different time horizons. At present we are now in a period of high AI-related capital investment. The question is how quickly this boosts labour productivity and, eventually, economies’ total factor productivity (TFP).
AI is already reshaping US economic growth but its labour market impacts are muted
AI-related investment has already become a visible growth driver, spreading across multiple sectors. Current US labour market tightness may be due to demographic and other issues around labour supply: at present, however, AI appears to be used to augment workers’ abilities rather than displace them.
AI investment booms and productivity improvements will not be fully synchronized
The US experience in the late-20th century IT revolution shows how the links between investment and productivity can take years to fully deliver: we expect a productivity dividend, but it will be lagged. Financial markets will, however, move ahead of the data and may not feel constrained by historical precedent.
The different levels of the AI ecosystem are well illustrated by the five-layer cake
analogy
Ultimately AI capability must be accompanied by demand and returns from the top down. Hyperscalers will continue to sit at the centre but AI adoption now needs to expand fast enough to justify the capital already invested and expected to be committed over the next few years.
The market focus will broaden to companies which can convert AI adoption into real, tangible productivity gains
But today’s leading AI companies look likely to continue to thrive, given that the current buildout is underpinned by strong earnings growth rather than valuation expansion.
Four key risks could affect the relationship between artificial intelligence and economic growth
First, AI monetization may lag expectations, casting doubt on existing and future capital deployment, with implications for overall economic growth as well as individual investment. Second, greater regulation may be attempted changing investment assumptions and thus pricing. Third, geopolitical competition around AI value-chain inputs and export controls, may disrupt AI supply and innovation, with side effects on broader politics and policy. Finally, localised energy-supply shortages may limit AI supply and prove difficult to resolve due to localized political opposition motivated by resource concerns and/or rising electricity prices.
AI's next phase
Click here to watch: PERSPECTIVES Video – AI's next phase
Further links on the topic
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Authors: Dr. Ulrich Stephan, Chief Investment Officer Germany - Dr. Dirk Steffen, Chief Investment Officer EMEA - Lorenz Majal, Senior Investment Strategist - David Pinto, Senior Investment Strategist
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