Enterprise Spending on Generative AI Skyrockets 500% to $13.8 Billion in 2024

Business spending on AI surged 500% this year to $13.8 billion, says Menlo Ventures

Business spending on generative AI surged 500% this year, from $2.3 billion in 2023 to $13.8 billion, according to data released by Menlo Ventures on Wednesday. The report also found that OpenAI ceded market share in enterprise AI, declining from 50% to 34%. Anthropic doubled its market share from 12% to 24%. The results came from a survey of 600 enterprise IT decision-makers from companies with 50 or more employees, per the report. Menlo is an investor in Anthropic. OpenAI did not immediately respond to a request for comment. Tim Tully, a partner at Menlo Ventures, told CNBC in an interview that the power shift is thanks in part to the advancement of Claude 3.5 and because the majority of companies are using three or more large AI models. Although OpenAI and Anthropic dominated companies' AI model use, he said, people are "juggling models" and that habit is "not a well-understood piece of data." "Developers are pretty savvy -- they know how to go back and forth between models fairly quickly," Tully explained. "They're choosing the model that fits their use case best... and that's likely Claude 3.5." Meta's market share stayed at 16% and Cohere's share remained at 3%. Google's rose from 7% to 12%, and Mistral's lost one percentage point, declining to 5% in 2024. Foundation models -- such as OpenAI's ChatGPT, Google's Gemini, Anthropic's Claude and others -- still dominated enterprise spend, the report found, with large language models receiving $6.5 billion in enterprise investment. Menlo's report was bullish on AI agents, a leading AI trend and area of investment in 2024. Google, Microsoft, Amazon, OpenAI and Anthropic are pursuing the technology. AI agents are viewed as a step beyond chatbots. They can perform multistep, complex tasks on a user's behalf, and generate their own to-do lists, so that users don't have to walk them through the process step-by-step. "The agent stuff is real -- it's not hype," Tully told CNBC. "I don't think it's going to cure cancer, necessarily, but is it going to make people more productive and help companies generate revenue? Yes." The report found code generation is the leading use case for generative AI, with more than half of survey responses naming that as a dominant use. Support chatbots came next, at 31%, followed by enterprise search and retrieval, data extraction and transformation, and meeting summarization.

Enterprise Spending on Generative AI Leaps as Tech Becomes 'Mission Critical' | PYMNTS.com

Enterprise spending on generative artificial intelligence (AI) increased sixfold in 2024 as businesses began implementing the technology after first experimenting with it. This spending reached $13.8 billion, up from $2.3 billion in 2023, venture capital firm Menlo Ventures said in a Wednesday (Nov. 20) press release. "2024 marks the year that generative AI became a mission-critical imperative for enterprise," Joff Redfern, partner at Menlo Ventures, said in the release. "The numbers tell a dramatic story of organizations moving beyond pilots to embedding AI at the core of their business strategies." Seventy-two percent of enterprise IT decision-makers from companies with 50 or more employees expect to see broader adoption of generative AI "in the near term," the release said. At the same time, the decision-makers said the transformation is not yet large in scale, as enterprises are focusing on high-value use cases for the technology, according to the release. Generative AI is being deployed across departments, the release said, with IT leading the way and accounting for 22% of spending. Other teams and their share of spending on the technology include product (19%), support (9%), data science (8%), sales (8%), marketing (7%), human resources (7%) and finance (7%). Healthcare is the leading vertical in terms of spending on generative AI, at $500 million, per the release. Other top verticals include legal services ($350 million), financial services ($100 million) and media/entertainment ($100 million). As for foundation models, the release said that organizations typically deploy three or more such models and that OpenAI's enterprise market share declined from 50% to 34% since 2023, while Anthropic's share increased from 12% to 24%. "With foundational infrastructure in place, enterprises can now shift their focus to the application layer, driving innovation and competition in real-world use cases," Menlo Ventures Partner Tim Tully said in the release. "We expect to see the true value of AI emerge -- transforming industries and unlocking entirely new markets."