Is GenAI a dying fad? A new study predicts 30% of investors will jump ship by 2025 after proof of concept
Gartner predicts that 30% of AI projects will be abandoned by 2025 after proof of concept.
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What you need to know
- A new study suggests that 30% of investors will withdraw from AI projects by 2025 after proof of concept.
- A separate study also indicated that AI is just hype, and few people use tools like ChatGPT and Microsoft Copilot.
- The study suggests that top executives struggle to identify a profitable path despite their hefty investment in the landscape.
Generative AI has been broadly adopted by top tech corporations like Microsoft and Google, who embrace the technology across their tech stacks. Admittedly, the technology faces a fair share of challenges preventing it from realizing its full potential, including high operation costs, high electricity and water consumption, and more.
Earlier this year, a new report suggested that AI might be a fad and further indicated that no one is using AI tools like ChatGPT and Microsoft Copilot. And now, a new report by Gartner suggests "at least 30% of generative AI (GenAI) projects will be abandoned after proof of concept by the end of 2025." The firm attributes its predictions to poor data quality, a lack of guardrails to prevent the technology from spiraling out of control, and high operation costs with no clear path to profitability.
As you may know, OpenAI is reportedly on the brink of bankruptcy, with projections of making losses amounting to $5 billion within the next 12 months. The ChatGPT maker might need another round of funding from its partners and investors to remain afloat.
According to Gartner's VP Analyst, Rita Sallam:
"After last year's hype, executives are impatient to see returns on GenAI investments, yet organizations are struggling to prove and realize value. As the scope of initiatives widen, the financial burden of developing and deploying GenAI models is increasingly felt."
Profits from AI ventures don't match the hefty investments
Gartner's report highlights the challenges key players have faced in the AI landscape, including their inability to justify the substantial resources ranging from $5 million to $20 million without a defined path to profitability. "Unfortunately, there is no one size fits all with GenAI, and costs aren't as predictable as other technologies," added Sallam.
According to Gartner's report, AI requires "a high tolerance for indirect, future financial investment criteria versus immediate return on investment (ROI)." As you may know, top company executives are more focused on generating revenue than entering risky business ventures head-first.
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According to a recent Gartner survey, respondents reported a 15.8% revenue increase, 15.2% cost savings, and 22.6% productivity improvement on average. The survey of 822 business leaders was conducted between September and November 2023.
Gartner
Early adopters of AI are ripping benefits from their timely investment. Over the past few months, Microsoft, OpenAI, and NVIDIA have scrambled for the world's most valuable company crown. Even Apple (often considered a late bloomer in the space) got a taste of the coveted seat thanks to its new AI strategy — Apple Intelligence.
Kevin Okemwa is a seasoned tech journalist based in Nairobi, Kenya with lots of experience covering the latest trends and developments in the industry at Windows Central. With a passion for innovation and a keen eye for detail, he has written for leading publications such as OnMSFT, MakeUseOf, and Windows Report, providing insightful analysis and breaking news on everything revolving around the Microsoft ecosystem. You'll also catch him occasionally contributing at iMore about Apple and AI. While AFK and not busy following the ever-emerging trends in tech, you can find him exploring the world or listening to music.
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naddy69 "AI" has always been a fad, and I have said so multiple times. It is about as useful/interesting as "smart speakers" were 5 years ago.Reply
The hype behind it has been absurd, which is finally fading now that reality has set in. A reality which includes the recent "Windows Recall" fiasco from Microsoft. That alone has certainly made lots of people way less excited about "AI" than they were last year. The whole "Copilot PC" thing could easily be abandoned in a couple years.
Yes, it could turn out to be marginally useful. In some cases. But it is NOT going to "replace all artists/programmers/whatever". It will NEVER have "nuclear power plants built next to every AI data center". What could possibly go wrong there? Not to mention that it takes at least 10 years to get a nuclear power plant designed/built/licensed/online. For obvious reasons.
As I said, the hype been totally ridiculous. Much of that hype has been right here. This place is much better now that the "AI" hype circus is fading. -
Cmndr_Bytes Hmmm....Reply
"Microsoft has recently posted its Q4 2024 results, kicking off a new financial year with a total revenue increase of 15% to $64.7 billion and a net income rise of 10% to $22 billion.
As expected, the Redmond-based tech giant has recorded a strong performance in AI and cloud sectors. The company’s cloud segment, particularly its Intelligent Cloud division, saw significant growth, contributing $28.5 billion and representing nearly 45% of total revenue."
https://mspoweruser.com/microsoft-q4-2024-results-record-yet-another-height-of-ai-cloud-performance/