Quality Thesis

By now, you’ve probably heard it a hundred times: AI is going to change everything. But what does that actually mean in economic terms? How big is this opportunity really? Let’s zoom way out—like, from-space-you-can-see-the-Great-Wall-of-China-out—kind of far. We’re going to take a very top-down look at what AI could be worth, based on global macro numbers, and see what it means for investors.

Step 1: Start With the Big Pie – Global GDP

Global GDP in 2024 clocked in at around $105 trillion (give or take a few trillion, depending on exchange rates and late-night Fed tweets).

Of that GDP, roughly 55% comes from labour income, according to OECD data. That gives us about:

Labour income = 55% of $105 trillion = $57.75 trillion

This is the money we humans earn from, well, being humans—thinking, moving, typing, farming, building, presenting terrible PowerPoints, etc.

Step 2: What If AI Makes Us Just 2% More Productive?

Let’s assume AI only improves labour productivity by 2%. That’s conservative—like wearing two seatbelts in a Volvo conservative.

2% of $57.75 trillion = $1.155 trillion

That’s $1.16 trillion of additional economic value per year, just from a tiny uptick in productivity.

Before you yawn and move on, let’s put that in context: That’s roughly the entire GDP of Mexico. Every year. From just a small productivity gain.

Step 3: Can AI Really Help Everyone?

Not all jobs are easily “AI-ed.” Sure, AI might not be milking cows just yet (though robots kind of are), but AI can still boost productivity even in manual sectors.

• Farming? AI-powered sensors and predictive tools optimize irrigation and yields.
• Manufacturing? AI improves logistics, predictive maintenance, and quality control.
• Healthcare? AI helps with diagnostics, scheduling, and even robotic surgery.
• White-collar work? AI is like an intern that works 24/7, never sleeps, and never eats your lunch from the office fridge.

So yes, the gains may be uneven, but the reach is surprisingly wide.

Step 4: So Who Captures That $1.16 Trillion?

Let’s say that the AI industry—the companies building the models, chips, cloud platforms, and software—captures just a slice of that value. Maybe 30–40% margins. That’s aggressive but not unrealistic for high-margin tech businesses.

AI profit pool = 30% of $1.155 trillion = $346 billion
Or at 40% margins = $462 billion

Even if some of this value leaks to open-source or gets competed away, we’re still talking hundreds of billions of dollars in potential annual profit.

Step 5: What’s That Worth in Market Terms?

Apply a P/E ratio of 20x—again, conservative for fast-growing industries—and we get:

• At 30% margin: $346 billion x 20 = $6.92 trillion market cap
• At 40% margin: $462 billion x 20 = $9.24 trillion market cap

Let’s split the difference and call it $8 trillion. That would be the fair market value of the AI industry, based on just 2% productivity gains.

Spoiler: that’s roughly the current combined market cap of Apple, Microsoft, Nvidia, Alphabet, and Amazon (and at the moment they so far only derive a small fraction of their profits from AI).

So if you’re wondering why those stocks have been on fire lately… well, this might be part of the reason.

Step 6: What If 2% Is Just the Beginning?

Let’s be real: a 2% productivity boost is a lowball estimate. If AI drives 5%, 10%, or even 15% productivity gains over time—especially as it moves from experimentation to full enterprise adoption—these numbers get exponential, fast.

And yes, there will be dislocations, regulatory hurdles, and the occasional robot meltdown, but the direction of travel is clear.

So What Should You Do as an Investor?

• Look for AI enablers: chipmakers, cloud providers, and infrastructure players.
• Look for AI adapters: companies in traditional sectors that will gain leverage from AI-enhanced productivity.
• Avoid shiny distractions: not every “AI-powered pet-sitting app” is a good investment (unless your dog is ChatGPT-obsessed).

And finally, take a breath. We’re still early in the game. AI will create value for decades, not just quarters.

Final Thoughts

The AI opportunity is real, tangible, and mathematically massive—even if we keep our expectations modest. A 2% productivity boost can unlock a multi-trillion-dollar market cap for the AI sector.

Of course, not every AI company will win. But as a long-term investor, recognizing the size of the opportunity helps you think clearly about where to plant your capital.

Just remember: even top-down views need bottom-up diligence. And maybe… a chatbot or two to help you along the way.