# AI productivity could justify trillions in annual investment

Markdown copy of https://realalpha.app/s/ai-productivity-could-justify-trillions-in-annual-investment/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Michael Dell](https://realalpha.app/builders/michael-dell/) · Michael Dell is founder of Dell. · Founded Dell Technologies and committed $6.25 billion to investment accounts for 25 million American children.
- Host: [Brad Gerstner](https://realalpha.app/people/brad-gerstner/) · Founder & CEO, Altimeter Capital · Started Altimeter with under $3M in 2008; an early backer of Snowflake.
- Host: [Bill Gurley](https://realalpha.app/people/bill-gurley/) · General partner, Benchmark · Backed and sat on the boards of Uber, Zillow, OpenTable and Stitch Fix.
- Show: BG2
- Episode: [Michael Dell – Invest America Act Becomes Law, AI Talent Wars, Compute Demand, Market Update | BG2](https://realalpha.app/v/X52BNWZrXSk/), Jul 10, 2025
- Moment: 46:13 to 53:41 of the episode (7 min), playing on https://realalpha.app/s/ai-productivity-could-justify-trillions-in-annual-investment/; the episode from there: https://realalpha.app/v/X52BNWZrXSk/?t=2773

## Quote

> “if we believe that a **10% improvement is possible** in productivity, if you just keep it simple, you say 10% improvement.”
> — [Michael Dell](https://realalpha.app/builders/michael-dell/) at [47:45](https://realalpha.app/v/X52BNWZrXSk/?t=2865) · BG2

## Takeaways

1. Dell sees 10–40% productivity gains in some cases.
2. A 10% gain across the global economy could be worth $10 trillion.
3. Michael warned Dell leaders that a faster rival could put them out of business.

## About this segment

Michael Dell argues that early productivity gains are real and could add trillions of dollars in value. He warns incumbents must reinvent themselves before new AI-native competitors do it for them.

From “Michael Dell – Invest America Act Becomes Law, AI Talent Wars, Compute Demand, Market Update | BG2”, Jul 10, 2025. [Watch the full episode](https://realalpha.app/v/X52BNWZrXSk/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[46:18](https://realalpha.app/v/X52BNWZrXSk/?t=2778) related topic of productivity gains from leveraging AI and kind of what you're seeing at Dell, We've talked on this podcast what we call the golden age of margin expansion. You know, this idea that you're seeing AI has certainly reaccelerated your top line in a pretty dramatic way, but it's doing that at a lot of companies. At the same time, you're able to do more with less. Is that overstated? Or do you think that we're in this phase over the next three, four, five years where generally as an economy and certainly within a lot of companies that they're going to be able to you know, have their top lines grow faster than their operating costs because of AI.

[47:00](https://realalpha.app/v/X52BNWZrXSk/?t=2820) It's absolutely real, Brad, and we are doing it. We know of other companies that are doing it. And I think, you know, maybe only 10% of companies, large companies have figured this out. And the other 90% are sort of a bit confused at this point. But, you know, if I step back and look at this, you know, 10% productivity improvements, pretty easy, 20%, you know, reasonably common sightings of 30% or 40%. Those are massive numbers. If you sort of step back and think about this, you know, you got $114 trillion global economy, right, in 2025. And services economy is two-thirds of that. You know, if we believe that a 10% improvement is possible in productivity, if you just keep it simple, you say 10% improvement.

[48:00](https://realalpha.app/v/X52BNWZrXSk/?t=2880) that's worth $10 trillion, right? And so, the amount of investment that is occurring today in AI could be quite a bit less than is really justified. I mean, if we believe in a 10% to 20% improvement, and I don't say that lightly because that's like an enormous thing if it were to occur, but let's just stick with this for a second. If we had a 10% to 20% improvement, the investment in AI should be more on the order of $2 to $4 trillion per year.

[48:38](https://realalpha.app/v/X52BNWZrXSk/?t=2918) Yeah. Yeah. And that's not where we are. It's a lot less than that. So I don't want to get too ahead of myself here, but I do think there is a big change that is occurring and we're just at the beginning of it and it's going to affect every part of uh our our world well you you you have particular standing here michael right you saw the productivity gain that came from a computer on every desktop you saw the productivity yeah that was the 90s we were talking about the 90s that was fun you you saw the productivity gain from the internet And now you're two years into observing this. Are the productivity gains from this going to be as big or bigger than what we saw from personal computers and the internet?

[49:33](https://realalpha.app/v/X52BNWZrXSk/?t=2973) It's far bigger. It's far bigger. Yeah, I feel 98% confident that it's far bigger than the PC. What about the internet? What about the internet? Yeah, I mean, so of course all these build on each other, right? It's compounding. But this is bigger because it is essentially all knowledge work. And I think it's an expansion of the pie, right? It's really easy to figure out what will be more efficient and how you can reduce costs.

[50:17](https://realalpha.app/v/X52BNWZrXSk/?t=3017) But if you go back 20 years ago, it was very hard to see where the new jobs would be. I think we're in a similar situation here as well. I do think it will be expansionary for the overall economy and for prosperity and for well-being and human potential broadly across all domains, whether it's in education, health, societal outcomes, et cetera. But yeah, this feels bigger. I remember in 2001, 2002, Michael, some companies that were early to, for example, Google, they figured out how to gain, you know, like I think a booking.com, right? They figured out how to arbitrage the internet and google to build this giant business right and so i would say like they figured out productivity gains before the next person and and and that was hugely advantageous and when you say that only 10 percent of companies are leveraging this today it kind of

[51:19](https://realalpha.app/v/X52BNWZrXSk/?t=3079) sounds like the same thing like the early companies are really there but there's a huge amount yet to come well you know i think i think i think about the big companies in the world i'm talking like you know 10 billion plus revenue companies uh you know uh 50 billion 100 billion plus revenue companies these companies have an incumbency of sorts right they have data they have customers they have brands they have ip etc but if they don't move quickly to reimagine their businesses given all this technology, they will be destroyed by new companies.

[52:00](https://realalpha.app/v/X52BNWZrXSk/?t=3120) that come in with a totally clean slate and you can already see signs of that happening. So I think this is all going to play out in the next three to five years and it will become sort of an urgent priority for companies to reimagine themselves. And, you know, what we've done at Dell is, you know, our team knows this because we talk about it all the time internally. You know, I think it was almost two years ago, I stood up in front of a group of our leaders and I said that five years from then, that would be three years from now, we're going to have a new competitor.

[52:50](https://realalpha.app/v/X52BNWZrXSk/?t=3170) and that new competitor is going to be in every business that we're in except they're going to be faster and more efficient and more capable and they're going to put us out of business and the only way we're going to prevent that is we're going to become that company and this is how we're going to do it and i sort of laid out our best guess as to how to do that you know two years ago uh we're pretty far you know uh into that path and well on our way and it's working but it's not an easy thing to do right this is a good this is sort of gut-wrenching stuff to reinvent reimagine we've had to do it many times if you don't do it you just go out of business so and that's no fun so we're not doing that and and and not everybody wants to do it