Companies will not make big profits from AI in the next few years – but many projects will simply be abandoned

New research from Gardener has claimed that about a third (30%) of generative AI projects will be abandoned by 2025.

The company predicted that such projects would be abandoned after the proof-of-concept phase due to challenges such as poor data quality, inadequate risk management, rising costs and unclear business value.

Gartner's research also suggests that companies may be slow to see tangible returns on their AI investments, which could fuel waning interest in the projects.

GenAI projects are abandoned too early

Renowned VP analyst Rita Sallam highlighted the growing impatience among executives: “After last year's hype, executives are eagerly awaiting the return on their GenAI investments, but companies are struggling to prove and realize the benefits. As the scale of initiatives increases, the financial burden of developing and deploying GenAI models is becoming increasingly noticeable.”

One of the biggest hurdles for companies is justifying the significant investments in GenAI to achieve productivity gains that are difficult to translate into financial benefits.

In addition, GenAI implementations typically come with high costs, ranging from $5 million to $20 million. Sallam commented on the differences between organizations, citing different goals and sectors: “With GenAI, there is no one-size-fits-all solution, and costs are not as predictable as with other technologies.”

Despite significant challenges, early adopters are already reporting many benefits. According to data collected by Gartner between September and November 2023, respondents reported an average increase in revenue of 15.8%, cost savings of 15.2% and a productivity increase of 22.6%.

However, according to the researchers, it is still around two years away from “AI in everyday life” being used. So we are still a long way from real productivity gains. And the initial fears that AI could replace human workers seem less likely.

Companies will not make big profits from AI in the next few years – but many projects will simply be abandoned

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Companies will not make big profits from AI in the next few years – but many projects will simply be abandoned

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