A Morning Executive Brief on AI Capital Spend in large Companies — March 25 2024
Created by: Rob Tyrie
Beginning Prompt: act as an editor. we are creating article with evidence. The job is to do a light edit on my writing and to expand the idea with certain facts and supporting articles. The rough draft is attached. THE STEEL THREAD: Where is your firm on the spend on AI. It’s a capital allotment game now. remember these are companies with billion dollar IT budgets. #iaadvice
Capital budgets and AI
The integration of generative AI into business operations is rapidly becoming a strategic imperative for companies with substantial IT budgets. As we move into 2024, we are witnessing the dawn of the application era in generative AI. This period is marked by the development of custom applications that leverage AI-powered tech stacks at multiple levels, signifying a significant capital allocation towards these technologies.
By 2025, we expect to see an expansion of application deployment in packaged applications, as the competitive landscape evolves with new entrants vying for a position in the application software space. These applications will predominantly be built upon foundation models provided by leading AI research organizations such as OpenAI, Anthropic, Google, Meta, Stability AI, and others[1][3][4][8].
For application builders to maintain a competitive edge, it is crucial to implement an abstraction layer within their AI infrastructure. This layer will ensure independence from any single foundation model, allowing for flexibility and adaptability in the application and platform development for the company[1][3].
Enterprises should prepare for the deployment of a diverse array of language models and generative pre-trained transformers (GPTs) across their operations. Leading companies are expected to integrate over a thousand custom GPTs that are loosely coupled to components of their new AI-powered tech stacks[3][4].
Executives and managers must be proactive in adopting generative AI technologies. Investing early in no-code/low-code generators based on emerging technologies is advisable to build a foundation for logical expansion on reliable and currently available tech[1][3][4].
The current era of AI experimentation and deployment is characterized by the proliferation of "co-pilots," the extensive use of synthetic data, and the generation of new content and solutions. However, there are no guaranteed quick wins in this transformative phase[1][3][4].
Back to the Future
The transition we are experiencing is reminiscent of the shift from client-server to web-based applications around Y2K. This multivariate challenge took a decade to resolve and, in hindsight, represents a logical progression in technological evolution. Unlike the Y2K scenario, there is no fixed deadline driving this change. Instead, the impetus for adoption will come from industry leaders who successfully leverage AI to capture significant market share from slower adopters[1][3][4].
Companies that can reduce their cost basis by 30-40% and subsequently lower their prices will pose a substantial threat to established market positions. It is imperative for businesses to recognize the potential of generative AI and act swiftly to avoid being outpaced by more agile competitors[1][3][4].
Let’s Go
As we navigate through this pivotal moment in AI adoption, it is clear that the decisions made today will shape the competitive landscape for years to come. Firms must be strategic in their investments, ensuring they are positioned to capitalize on the transformative power of generative AI[1][3][4].
It is important to note that while Perplexity.ai is an application that utilizes generative AI, it is not a foundation model itself but rather relies on underlying foundation models[1].
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Sources:
1. BCG: "What is Generative AI and How Does it Impact Businesses?"
2. Forbes: "24 Top AI Statistics & Trends In 2024"
3. CNBC: "The AI spending boom is spreading far beyond big tech companies"
4. McKinsey: "Economic potential of generative AI"
5. Statista: "Artificial Intelligence - Global Market Forecast"
6. Built In: "33 Examples of AI in Finance 2024"
7. WSJ: "How Did Companies Use Generative AI in 2023?"
8. Bloomberg: "Generative AI to Become a $1.3 Trillion Market by 2032, Research Finds"
Citations:
[1] What is Generative AI and How Does it Impact Businesses? | BCG https://www.bcg.com/capabilities/artificial-intelligence/generative-ai
[2] 24 Top AI Statistics & Trends In 2024 – Forbes Advisor https://www.forbes.com/advisor/business/ai-statistics/
[3] A.I. is now the biggest spend for nearly 50% of top tech executives across ... https://www.cnbc.com/2023/06/23/the-ai-spending-boom-is-spreading-far-beyond-big-tech-companies.html
[4] Economic potential of generative AI - McKinsey https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/the-economic-potential-of-generative-ai-the-next-productivity-frontier
[5] Artificial Intelligence - Global | Statista Market Forecast https://www.statista.com/outlook/tmo/artificial-intelligence/worldwide
[6] 33 Examples of AI in Finance 2024 | Built In https://builtin.com/artificial-intelligence/ai-finance-banking-applications-companies
[7] How Did Companies Use Generative AI in 2023? Here's a Look at Five ... https://www.wsj.com/articles/how-did-companies-use-generative-ai-in-2023-heres-a-look-at-five-early-adopters-6e09c6b3
[8] Generative AI to Become a $1.3 Trillion Market by 2032, Research Finds - Bloomberg.com https://www.bloomberg.com/company/press/generative-ai-to-become-a-1-3-trillion-market-by-2032-research-finds/
[9] AI could reshape ad budgets and marketing strategies - Yahoo Finance https://finance.yahoo.com/video/ai-could-reshape-ad-budgets-214228104.html
[10] The state of AI in 2023: Generative AI's breakout year | McKinsey https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-state-of-ai-in-2023-generative-ais-breakout-year
[11] What will the software market look like with the rise of AI? - CodeStringers https://www.codestringers.com/insights/what-will-the-software-market-look-like-with-the-rise-of-ai/
[12] 12 most popular AI use cases in the enterprise today - CIO https://www.cio.com/article/652775/12-most-popular-ai-use-cases-in-the-enterprise-today.html?amp=1
[13] It's time for everyone in your company to understand generative AI https://mitsloan.mit.edu/ideas-made-to-matter/its-time-everyone-your-company-to-understand-generative-ai
[14] AI is Dampening Tech Spending, For Now - InformationWeek https://www.informationweek.com/machine-learning-ai/ai-is-dampening-tech-spending-for-now-
[15] How businesses are actually using generative AI - The Economist https://www.economist.com/business/2024/02/29/how-businesses-are-actually-using-generative-ai
[16] Artificial Intelligence Market Size And Share Report, 2030 - Grand View Research https://www.grandviewresearch.com/industry-analysis/artificial-intelligence-ai-market
[17] The Extraordinary Ubiquity Of Generative AI And How Major ... https://www.forbes.com/sites/moorinsights/2023/07/21/the-extraordinary-ubiquity-of-generative-ai-and-how-major-companies-are-using-it/?sh=31c1fc682124
[18] Artificial Intelligence (AI) Software Market Size, Report 2032 - Precedence Research https://www.precedenceresearch.com/artificial-intelligence-software-market
[19] Generative AI and Its Economic Impact: What You Need to Know https://www.investopedia.com/economic-impact-of-generative-ai-7976252
[20] Artificial Intelligence Software Market Forecasts - Omdia https://omdia.tech.informa.com/om000884/artificial-intelligence-software-market-forecasts
