Investors Anticipate 32.6% Productivity Boost from AI in Software Engineering

• •AI is projected to boost software engineering productivity by 32.6%.
• •Stock market movements reflect investor confidence in AI-driven productivity gains.
• •The findings are based on data from November 2022 to December 2025.

Economists from UC Berkeley and LSE estimate that AI has increased the expected productivity of software engineers by 32.6% based on stock market movements from November 2022 to December 2025. This analysis suggests that investors have integrated anticipated gains from AI tools into company valuations since the launch of ChatGPT. The findings indicate that companies with a higher proportion of software engineering payroll have seen more significant stock price increases in response to AI developments. While the productivity estimate is substantial, the researchers caution that market expectations may not fully materialize. The study highlights the ongoing trend of increasing software engineering employment among firms, although the productivity estimate is independent of this trend. The research is detailed in a paper titled 'The Macroeconomic Effect of AI: Sizing the Software Engineering Channel.'