We just can’t stop hearing about AI technology nowadays. This is because it’s supposed to be the next step in human achievement. Also, because companies just don’t shut up about it! For all of its potential pitfalls and challenges, the tech industry seems to be confident in AI tech. However, that’s just how it seems to the public. Behind the scenes, however, it seems that companies are losing faith in AI.
It’s always behind closed doors where we see the most news. We’ve seen Sundar Pichai, Sam Altman, and Satya Nadella among countless others on stage talking about how they have immense faith in their AI tech. That’s all fine and dandy, but do you think that they’re going to dedicate a keynote to any issues that are going on with their AI tech? Of course not! It’s their job to make us think that everything is A-OK.
But, the thing is that things aren’t always A-OK in the world of AI tech. There’s a ton of doubt and tension throughout the tech industry regarding AI, and we only know about a fraction of it. We only hear what slips through the cracks. A testimony from an employee at a tech firm here, an exclusive leak there.
The fact of the matter is that the companies propping up this technology (the ones injecting billions of dollars into AI companies) are starting to shy away. They’re not as likely to invest so much money in it. Sure, you can’t go online without seeing an ad for some new AI service. You can’t go on social media without seeing some new AI-generated video that makes you fear for the film industry. But, the people making that possible might be stepping back a bit.
Major companies could be losing faith in AI
It’s money that makes the world go around, and it’s what makes your chatbot so smart. In case you don’t know, AI is an extremely expensive technology to nurture. It costs money to train models, run data centers, secure GPUs, and so on. If you’re looking to make an AI start-up, you’ll need some major investors.
Companies like Microsoft, Google, and Amazon among many others have been investing billions in AI start-ups to make the dream of AGI (artificial general intelligence) materialize. So, why are these investments slowing down?
The 2024 report from Standford University’s Institution for Human-Centered AI revealed something a bit surprising. Investments in AI have been dropping year-over-year. According to the report, the peak of investments was actually a year before the big AI boom. The report (via GIZMONDO) 2021 AI saw investments of about $337 billion. That fell more than $100 billion to $234 billion in 2022. This was the year of the AI boom, so you’d expect the numbers to soar in the next year. However, that’s not the case. In 2023, investments dropped around $40 billion.
Even with the potential of generative AI, companies still seem to be wary of the technology. AI has infected just about every tech and creative industry on the planet, there’s a ton of money to be made… right?
The dream of AI is just that… a dream
“The count of billion-dollar investments has slowed and is all but over,” Garter analyst John-David Lovelock told TechCrunch earlier this year. Companies are investing in AI start-ups, but the age of $13 billion investments like we saw with Microsoft and OpenAI might be gone. Why?
Well, why did these companies invest in AI in the first place? They’re pouring money into the technology because it has the potential to be a massive moneymaker. It has POTENTIAL. It shows all of the signs, and companies are hopeful. However, the fact of the matter is that no one really knows what’s going to happen with AI technology. We’re still in the early stages of generative AI development even though it’s been in production for years. AI employees, companies, and investors are all dreaming of a world where AI is spitting out money like a broken slot machine. Well, guess what, that’s a dream.
Money void
AI is a gigantic money void. Companies invest a ton of money into it in the hopes that it will turn a profit in the future. However, it seems that the journey to a profit is taking longer than expected. If you’ve invested $5 billion in a company, and it’s still not turning a profit, then you’re less likely to invest that much again.
Companies are starting to realize that AI isn’t going to start making money soon. Several of the AI companies offer their services for monthly subscriptions. That’s a model that needs millions, if not hundreds of millions of customers to see some sort of return depending on how much money you’ve invested in a company. Disney+, with more than 200 million users still struggled to make a profit. It still might not have turned a profit yet.
Investors don’t know when/if AI technology will be a cash cow tomorrow; what they know is that they’re burning a ton of money today. Companies are losing faith and money over AI.
As if anyone’s surprised, it’s also about accuracy
There are reasons why you shouldn’t trust everything that AI produces. There are people who use AI to spread misinformation, but AI can spread it on its own sometimes. The thing is that AI hallucinations are still a pretty big issue in the AI space, and that’s something that companies are looking at. This is another reason why companies are losing faith in AI.
AI hallucinations are when an AI model basically makes up information. You’d get responses with no rhyme or reason. It’s still one of the main problems holding AI technology back. General users are losing faith in the technology because of this. Along with general users, major companies are also slowing down their development because of this.
According to a recent study from Lucidworks (via Reuters), manufacturers are starting to get pretty wary about AI technology because of the accuracy issues. Earlier this year, the company surveyed 2,500 leaders who have a say in AI. About 58% of those leaders planned to increase spending on AI. That’s a massive drop from the 93% from last year. Back in 2023, the world was still getting a feel for what AI had to offer, and companies were still trying to get in as early as possible.
Now, companies are starting to see the true cost of AI. Not only that, but they’re starting to see just how badly AI can mess up. 44% of the manufacturing respondents expressed some sort of concern over AI accuracy.
So, these companies are holding onto their dollar bills just a little bit tighter.
What does this mean?
It’s tough to say what this means for the AI industry as a whole. Companies like Google, Microsoft, and OpenAI are going to continue dumping gallons of green into their AI machines. OpenAI has probably the most popular AI tool on the market, Google has been an AI company for years before ChatGPT, and Microsoft is still going crazy over AI. However, it seems that the rest of the industry is starting to lose some of the hype for AI.
At the end of the day, it all comes down to the almighty dollar. It depends on how much money companies are still willing to spend on AI technology.
Maybe the money that companies were investing is like Meta Threads’ user base. Remember when Threads was new? Its user base shot up to over 100 million within a week. Then, as people started to learn more about the app and what it was missing, its user base dropped. After Meta made improvements and added features, people started to rejoin.
Well, this might be what we could see with AI spending. During the initial period when ChatGPT was wowing the world, everyone jumped on board and wrote giant checks to fund this revolutionary new technology. However, after learning a bit more about the costs associated and the AI inaccuracies, they’re backing off. Well, as AI technology gets better, who knows if we’ll see investments pick up again?
Right now, it’s anyone’s guess. Companies ar losing faith in AI, and that doesn’t bode well for it. For all we know, this could be the start of the slow heat death of AI technology.
