Generative AI Receives Under 1% of Enterprise Investment, Traditional AI Hits 18%

It seems like generative AI is the single most important technological innovation of the modern era, but in spite of the fact that this is the case, enterprise investments in the sector have reached an all time low. According to a report released by Menlo Ventures, just 1% of enterprise investments in AI go towards generative AI, while traditional AI receives 18% with all things having been considered and taken into account.

While many assumed that generative AI would take precedence, this clearly hasn’t translated into a sufficient amount of venture capital. With all of that having been said and now out of the way, it is important to note that around $400 billion has been invested into cloud spend. $70 billion has gone towards traditional AI, with a meager $2.5 billion being invested in generative AI.

One potential reason for this is that the industry is still quite new. Investors will be cautious because of the fact that this is the sort of thing that could potentially end up allowing them to check the waters before diving in, and it will be essential for further innovations to set the stage for the future.

However, there are projections that paint a rosy picture of where generative AI might stand by the end of the decade. It is estimated that investments in the sector will grow by 31.5% on an annual basis, eventually bringing the total to $76.8 billion by the year 2030.

More optimistic predictions suggest that the industry could be worth as much as $450 billion after seven years, with 12 separate verticals being noted. This will give venture capital firms more to work with than might have been the case otherwise, and it will be interesting to see where things go from here on out.

It bears mentioning that 48% of enterprises were already using AI prior to the arrival of ChatGPT. This proportion has now increased to 55%, and AI spending grew by an estimated 8% in the same time period. If the current trend persists, generative AI might slowly but surely start to reach its full potential.

This indicates that 2024 will be an essential litmus test for the industry. More inflow of capital will assure investors that their investments will bear fruit, and that will only become apparent after a year or so has passed.

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