Generative AI has moved into a Trough of Disillusionment despite high enterprise spending. Organizations averaged $1.9 million on generative AI initiatives in 2024, yet fewer than 30% of AI leaders report that their CEOs are satisfied with AI investment returns. The market leader Microsoft reached a $3 trillion valuation driven by AI investments, exposing the company to risk if enterprises continue finding limited value. The prevailing cause of disappointment is the lack of clear, effective use cases. When enterprises identify optimal applications and integration approaches, AI spending can produce substantial business benefits.
Gartner has documented the booms and busts of new technologies for decades by tracking what it calls their "hype cycles." The company has been tracking AI's hype cycle and warns, "last year's Hype Cycle for AI highlighted genAI as a potentially transformational technology with profound business impacts. This year, genAI enters the Trough of Disillusionment."
Microsoft became a $3 trillion company based on its investments in AI. So, if businesses continue to find little value in AI projects, the company's financial future will be endangered. But there's a silver lining to the glum findings by McKinsey, S & P Global, Gartner and the rest. They all conclude the same thing: enterprises have been unhappy with their AI investments because they haven't yet found out how best to use the technology. Once they do, AI spending can bring significant benefits.
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