As 2023 was the "hype year" for AI, 2024 looks to be the year where serious adoption of AI applications will finally occur. Unlike $GOOGL
is the only Big Tech company that has a full AI platform available for corporate buyers. The demand of it looks to be high as analysts predict Copilot will reach $10 billion
in revenue annually by 2026
. Interestingly, when Microsoft initiated their early pilot program to 600 Gartner clients in May 2023, most of them did not want to continue using Copilot because they had concerns relating to costs, data, and legal issues.
With the cost of $30/month per user for a 300-seat minimum, many companies are hesitant to adopt Copilot. $GOOGL
is offering $30/month
for their Duet AI service but when compared to Copilot, Copilot is superior
. Gartner does predict that the 300-seat minimum will be eliminated overtime as Copilot adoption widens.
In terms of adoption, companies will first adopt Copilot to enhance the productivity of their IT department along with departments where problems that can be solved with AI have already been identified. Most of the adoption in the first half of 2024 will relate to those areas. Overtime, as Copilot becomes capable of connecting with other applications, the main value of Copilot will be unlocked. With many more AI applications from other companies like $ADBE
coming out, we could see overspending on AI applications from enterprise customers initially and overtime, spending will moderate their spending as companies start removing AI applications that they find less useful.
When you compare the projected AI spending to the projected cybersecurity spending, at the end of the day, cybersecurity spending will be higher. CNBC
"In 2024, Gartner predicts that $114.8 billion dollars will be spent by enterprises on security, versus $21.8 billion dollars on generative AI. That means roughly $5 will be spent on security for every dollar spent on gen AI. For every dollar spent on IT as whole, only one-half of a cent will be allocated to gen AI, according to Gartner’s chief forecaster John Lovelock."
While the makers of AI products are finally going to see revenues that justify their $200 billion capex spending
on AI chips, the companies adopting the AI applications are going to see a return on their AI spending over a longer period of time
. PwC, one of the Big 4 accounting firms, introduced ChatPwC to 75,000 workers. ChatPwC is PwC's internal generative AI tool powered by OpenAI and running in a secure Microsoft Azure environment. While business leaders hold concerns over the possibility of these AI tools costing more money than it saves within a 12 month timeframe, the consensus is that the payback period will be more than a year.
When considering the case of McKinsey, where the consulting giant created its own AI platform called Lilli that enables consultants to do “in minutes what it would have taken them weeks to do
," workers were able to adopt Lilli quickly and have seen increases in their productivity. Since Copilot and ChatPwC are similar to Lilli, it's reasonable to expect that returns on AI tools spending will come sooner than people realize as the productivity gains will translate to more revenue and thus more profit.
The future of the world will be exciting as AI will unlock human productivity unlike anything we've seen before. With increased productivity, people will be able to make more money and live better lives. Jobs will be created as companies will want more people that can use the AI tools to make them more money.