The short answer is yes, although the evidence currently comes through leading indicators such as revenue growth rather than conventional return metrics, and not yet to the extent required to fully reassure investors.
The first point to make is that AI adoption continues to accelerate. Whether through consumer chatbots, software development, digital advertising or AI embedded within enterprise applications, adoption is increasing rapidly as the technology evolves and demonstrates its usefulness. This is an important starting point. Widespread adoption is a necessary condition for the current investment cycle to generate attractive returns.
Had AI failed to deliver meaningful productivity gains or user value, the scale of investment taking place today would undoubtedly prove difficult to justify. Fortunately, the evidence increasingly points in the opposite direction.
The more difficult question is whether that adoption is beginning to translate into company financials. In our view, there are two particularly useful areas to examine: the revenues being generated by the leading large language model (LLM) developers and the revenue growth of the hyperscale cloud providers investing most heavily in AI infrastructure.
Starting with the model developers, companies such as OpenAI and Anthropic are among the fastest-growing software businesses ever created. While precise figures vary across public disclosures and industry estimates, both appear on track to generate tens of billions of dollars of revenue during 2026, with growth expected to remain exceptionally strong.
To illustrate the pace of that growth, Anthropic disclosed in May 2026 that its annualised revenue run rate had exceeded $47 billion, just five years after the company was founded.
Elsewhere, the hyperscale cloud providers are also beginning to see AI contribute more meaningfully to growth. Revenue growth has started to improve, while customer backlogs, representing committed future spending, continue to expand. Those backlogs suggest that demand for AI infrastructure remains strong and provide confidence that growth should continue as additional capacity comes online.
Encouraging as these developments are, they have not yet been sufficient to fully alleviate investor concerns for several reasons.
First, the scale of investment remains so significant that revenues still need to grow considerably before returns begin to approach historical levels. One useful measure in this regard is tangible asset turnover, which compares the revenue generated by a company’s physical assets with the capital invested in them.
For the largest AI investors, this measure has come under considerable pressure as data centre investment has accelerated much faster than revenues. As utilisation improves and newly built capacity is put to work, this metric should begin to recover. For now, however, it serves as a reminder of just how much investment has been undertaken ahead of demand.
Second, revenue growth should be viewed as a leading indicator rather than definitive proof that AI investments are generating attractive returns. Ultimately, investors will judge these investments on the earnings, cash flows and returns on capital they generate. Strong revenue growth is therefore an important first step, but it must ultimately translate into higher profitability, stronger cash generation and improving returns on capital.
Our view
We remain comfortable with the current dynamic. Large investment cycles are rarely linear, and periods where upfront investment runs well ahead of future returns often prove uncomfortable for investors. However, we believe the industry is approaching the point where a growing proportion of today’s investment should begin translating into materially stronger revenue growth. Company commentary around AI demand and expanding cloud backlogs increasingly supports that view.
We also believe there are credible reasons why that revenue can ultimately generate attractive returns. Many of the largest AI investors operate highly profitable businesses with strong competitive positions, significant scale and established routes to monetisation. If AI-related revenues continue to grow, those characteristics should provide a pathway for that growth to translate into earnings, free cash flow and improving returns on capital.
That is not to say the investment cycle is without risk. The fact that AI is proving to be a useful technology does not necessarily mean the current level of investment is appropriate. History contains many examples of technologies that ultimately transformed the economy but still experienced periods of excessive investment along the way. Both statements can be true.
One important risk is customer concentration. A significant proportion of cloud providers’ committed demand ultimately depends on a relatively small number of leading LLM developers. Should those companies materially reduce their investment plans, the effects would likely ripple through the AI supply chain.
That said, the LLM companies are not the ultimate source of demand. Their investment decisions are themselves driven by businesses and consumers adopting AI applications across the economy. In other words, end-user demand ultimately determines the need for additional compute capacity, with model developers acting as intermediaries between users and infrastructure providers.
Conclusion
The evidence that AI investment is generating meaningful revenues continues to strengthen. Adoption is accelerating, frontier model developers are monetising at an extraordinary pace, and hyperscale cloud providers are beginning to see stronger growth from AI-related workloads.
While revenues are only the first step, we believe the largest AI investors are well positioned to convert that growth into earnings and cash flow in the future. Their scale, profitability and strong competitive positions provide a credible foundation for improving returns as utilisation rises and the revenue contribution from AI becomes more meaningful.
So, is there an AI ROI? It is still early but the signs continue to move in the right direction, giving us increasing confidence that today’s investment will ultimately generate attractive returns.
Securities/sectors/regions mentioned are for illustrative purposes only and not a recommendation to buy or sell any security.
Credit: Schroders
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