Economics

Where Does the ROI Go?

Faultlines AI Leadership Council

Global AI spending shows no sign of slowing. Institutions are approving budgets on a trajectory that would have looked reckless for almost any other category of capital allocation five years ago. Yet ask the one question that should come before all of it, whether the investment actually pays back, and the answer gets murkier the harder you look. The gap between what is being spent and what is being proven is the real story in AI economics right now.

What Is Actually Being Spent

Gartner puts worldwide AI spending at approximately $1.765 trillion in 2025, rising to $2.596 trillion in 2026, a 47 percent increase in a single year, with $3.493 trillion forecast for 2027. Infrastructure, the hardware and data centre capacity behind the models, accounts for the largest share: $1.43 trillion of the 2026 total, with spending on data centres alone expected to grow 55.8 percent to more than $788 billion.

Software tells a smaller but faster growing story. Gartner expects spending on AI agent software to reach $206.5 billion in 2026 and $376.3 billion in 2027, while spending on the underlying AI models and platforms climbs from $39 billion in 2025 to $64 billion in 2026, a 63 percent jump.

IDC's numbers, built on a different methodology, tell a consistent underlying story even where the totals do not match Gartner's. AI infrastructure spending alone, hardware only, more than doubled from $153 billion in 2024 to $318 billion in 2025, and IDC expects it to reach $487 billion in 2026 and pass $1 trillion by 2029. Widen the lens to the full stack, hardware, software and services together, and IDC's separate spending guide puts the 2029 figure closer to $1.3 trillion, growing at nearly 32 percent a year. In the fourth quarter of 2025 alone, GPU-based servers accounted for 97.6 percent of all AI infrastructure spending, a reminder of how concentrated this spending still is in raw compute.

None of these totals agree with each other, and that is itself worth noting. Gartner, IDC and the hyperscalers define AI spending differently enough that the headline numbers cannot be added together or meaningfully compared. What all of them agree on is the direction and the scale. This is now one of the largest capital allocation cycles in corporate history, and a growing share of it is being financed with debt rather than free cash flow.

Who Is Actually Writing the Cheques

Much of the infrastructure investment sits with Amazon, Alphabet, Meta and Microsoft. Their reported spending and guidance illustrate the scale of the build-out, but comparisons require care because reporting periods and capital-expenditure definitions can differ.

  • Amazon: guiding to around $200 billion in 2026, up from $125 billion in 2025.
  • Alphabet: guiding to $175 billion to $185 billion in 2026, up from $91 billion in 2025.
  • Meta: guiding to $115 billion to $135 billion in 2026, up from $72 billion in 2025.
  • Microsoft: guiding to $110 billion to $120 billion in 2026, up from $90 billion in 2025.

Goldman Sachs projects the same four companies will spend a combined $5.3 trillion on capital expenditure between 2025 and 2030. McKinsey puts the wider data centre build-out required to keep pace with AI demand at $6.7 trillion globally by 2030. Enterprise spending, by contrast, is still a rounding error next to infrastructure. Menlo Ventures puts enterprise generative AI spending at $11.5 billion in 2024, rising to $37 billion in 2025, more than tripling in a year but still a fraction of what the hyperscalers alone are spending on capacity.

Why the ROI Keeps Disappearing

Ask whether that spending is paying back, and the evidence splits in a way that should make any board uncomfortable. MIT's Media Lab, in a widely cited study published in August 2025, found that 95 percent of generative AI pilots showed no measurable impact on profit or loss, against an estimated $30 billion to $40 billion of enterprise investment. McKinsey's 2025 State of AI survey found that 88 percent of organisations now use AI regularly in at least one business function, up from 78 percent the year before, yet only 39 percent could point to any measurable effect on the bottom line, and only around 5.5 percent, 109 companies in McKinsey's sample, reported that AI contributed more than 5 percent of earnings before interest and tax.

Gartner expects more than 40 percent of agentic AI projects to be cancelled by 2027, and found that most of the ones already cancelled were killed for a reason that was knowable before they started: nobody had agreed what success would look like. Deloitte's 2025 survey found that only 6 percent of organisations saw a return within a year of deployment, and 46 percent of projects were scrapped somewhere between proof of concept and full rollout.

Adoption is not the same as return. Almost every organisation has adopted AI. Very few can prove it paid for itself.

Is ROI really this elusive? The honest answer is that it depends on what is being measured and where you look. Ask whether a company is using AI somewhere in the business and the answer is overwhelmingly yes. Ask whether that use is moving the bottom line in a way the finance function would sign off on, and the answer shrinks fast. The two questions get asked interchangeably in most public commentary, and conflating them is where a lot of the confusion, and a lot of the overclaiming in both directions, comes from.

Where It Is Actually Working

The successes are real, but they cluster. McKinsey's own data shows that a small group of what it calls AI high performers, roughly 5 to 6 percent of organisations surveyed, capture a disproportionate share of the value being created, not through enterprise-wide transformation programmes but through a repeatable pattern:

  • A narrow, well-scoped use case rather than an open-ended mandate.
  • A named owner accountable for the outcome.
  • A measurable target agreed before the money was spent.
  • A kill criterion if that target was not being met.

Fraud detection, demand forecasting, document processing and customer service automation come up again and again as the applications where the return is most consistently proven across multiple studies, precisely because the task is bounded, the baseline is measurable, and the cost of being wrong is contained.

That pattern matters more than any individual case study. The organisations capturing real value are not the ones with the most ambitious AI strategy. They are the ones that treated a specific, bounded problem the way they would treat any other capital project: a named owner, a target set before the money was spent, and a kill criterion if it was not being met.

What the Next Few Years Look Like

Gartner's own maturity model treats 2025 as the year of AI assistants, 2026 as the year of task-specific agents, 2027 as the year of agents that collaborate across functions, and 2028 as the year those agents begin operating across entire application ecosystems. By 2028, Gartner expects more than 95 percent of enterprises to have used generative AI models or deployed generative AI applications into production somewhere in the business.

None of that is a forecast that ROI will suddenly arrive. It is a forecast that usage will keep climbing regardless of whether the return does, which is precisely the gap boards need to be watching. The more credible forecasts for the next two to three years converge on the same theme: less experimentation, more governance, and a much harder line on proving value before scaling further. That is a healthy correction, not a retreat, and it is exactly the discipline this fault line is meant to test.

Who Actually Captures the Value

There is a second question sitting underneath all of this, one that gets asked far less often than it should. Even where AI is generating value, who is capturing it? Right now, the honest answer is mostly the infrastructure layer, not the enterprises deploying it. The concentration of AI capital expenditure in a handful of infrastructure providers has produced a financing structure that regulators are now openly worried about.

Analysts estimate more than $800 billion in what has become known as circular financing: Nvidia invests in and supplies OpenAI, OpenAI commits hundreds of billions to cloud providers, and those providers buy Nvidia chips to build the capacity OpenAI is paying for. Nvidia is reportedly weighing a guarantee of up to $250 billion for a single OpenAI data centre project, alongside a separate arrangement to help finance OpenAI's purchase of $350 billion of Nvidia's own chips.

The Bank of England's Financial Stability Report, published in July 2026, flagged AI-related market concentration, leverage and debt-financed infrastructure build-out as a genuine risk to financial stability, not a niche technology concern. The IMF made a similar point in 2025 and again in 2026: AI is changing the risk profile of the financial system itself, and if the earnings expectations behind the current spending crack, the fallout would not stay contained to technology stocks.

None of this means the technology is not real, or that the spending is irrational. It means the economics of AI cannot be assessed by looking at enterprise ROI in isolation. Vendor concentration risk, the financing structure behind it, and the total cost of ownership an institution is actually taking on are all part of the same picture, and very few boards are being shown all three at once.

Put the two halves together, the spending data and the return data, and a pattern emerges that has nothing to do with the quality of the technology. The institutions capturing real value share a named owner, a target agreed before the money was spent, and an honest view of total cost of ownership beyond the initial build. The ones that do not are, on average, funding the vendors' growth more than their own. That is a governance failure wearing a technology costume.

The Economics Fault Line

This is exactly what the Economics fault line tests inside an AI Leadership Review: whether the investment case actually pays back, on what timeline, and who captures the value it creates, the institution, its customers, or the vendor, before the next round of spend is approved, not after.

If you want to stress-test your own institution's AI investment case, including where the value is actually landing, we will walk you through it directly. Email confidential@faultlines.group.

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