7 AI Trends to Watch Closely in 2024

JD Prater

November 14, 2023

Table of Contents

As we edge closer to 2024, I'm reminded of a marketing conference I attended last week, where AI was a main focus. Everywhere I went, every conversation I heard, AI was at the center. The air was alive with discussions about the latest AI tools and the ethical implications of AI integration. This vividly illustrates just how AI has permeated the cultural zeitgeist.

AI is no longer just a specialized tech niche; it has become a dominant force that is reshaping industries, redefining job roles, and changing our everyday lives. It's remarkable how a topic, once the domain of tech enthusiasts and experts, is now a key talking point across various professional fields.

So, as we navigate through the dynamic world of AI trends heading into 2024, let's explore how these conversations and developments are not only shaping our present but are poised to significantly impact our future.

To give you the most comprehensive view of this evolving AI landscape, I've sifted through, scrutinized, and distilled key trends from 6 AI reports to present you with an insightful overview of the current state of AI and its potential trajectory into 2024 and beyond.

  1. State of AI: A Report on AI in Production (Retool, November 2023)
  2. 2023: The State of Generative AI in the Enterprise (Menlo Ventures, November 2023)
  3. Survey: Large Language Model Adoption Reaches Tipping Point (Arize, Oct 2023)
  4. Poll Finds 55% of Organizations are in Piloting or Production Mode with Generative AI (Gartner, Oct 2023)
  5. The Hidden Costs, Challenges, and Total Cost of Ownership of Generative AI Adoption in the Enterprise (AI Infrastructure Alliance, September 2023)
  6. 2023 Global Trends in AI Report (S&P Global Market Intelligence, August 2023)

AI's influence extends far beyond data and algorithms; it's redefining our approach to problem-solving, decision-making, and innovation. We're tapping into potentials we've only just begun to explore, opening doors to possibilities that once seemed like science fiction.

Trend 1. Increasing Adoption and Scaling of AI

AI adoption is on a remarkable rise: 61.7% preparing to launch LLM apps, with significant progress from piloting to production.

The transformative growth in AI adoption and scaling is evident in the latest industry data. Here’s a closer look at this trend:

Enterprise AI Adoption Post-ChatGPT

The launch of ChatGPT marked a pivotal moment in enterprise AI. Following its introduction, 

  • There was a 7% increase in the number of enterprises using some form of AI, rising from 48% in 2022 to 55% in 2023 (Source: Menlo Ventures).
  • Moreover, AI spending within these enterprises grew by an average of 8%, underscoring the expanding role and investment in AI technologies (Source: Menlo Ventures).
  • 61.7% of developers and teams are preparing to launch Large Language Model (LLM) applications within the coming year (Source: Arize Survey).
AI projects transitioning from proofs of concepts and pilots to production
Source: The Hidden Costs, Challenges, and Total Cost of Ownership of Generative AI Adoption in the Enterprise (AI Infrastructure Alliance)

Diverse AI Readiness from Retool

  • 15.7%: Just beginning their AI journey.
  • 29.6%: Actively laying foundational groundwork.
  • 19.3%: Experimenting with ad-hoc AI use cases.

Progress in AI Projects

  • 45%: Currently piloting AI initiatives (Source: Gartner Poll).
  • 10%: Advanced to full AI production stages (Source: Gartner Poll).
  • Notable Growth: Increase from 8.3% to 14.7% in AI production within a few months (Source: Gartner Poll).
  • 69% of Businesses: Have at least one operational AI project, indicating significant integration of AI into mainstream practices (Source: S&P Global Market Intelligence).

These statistics collectively depict an AI sector at the brink of 2024, demonstrating both enthusiasm and a pragmatic approach, where experimentation is widespread, and commitment to integrating AI into business and technology is increasingly evident.

Trend 2. AI’s Expanding Role in Business and Customer Engagement

Growing popularity of RAG in AI applications, indicating a shift in AI’s role from operational to interactive user engagement.

AI is being actively employed in businesses for diverse purposes, from streamlining internal operations to enriching customer engagement externally.

Let’s break down its diverse applications:

Inside Companies

Generative AI Adoption: On the Brink of a Massive Upswing according to AI Infrastructure Alliance,

  • Current Adoption: A modest beginning, with about 11-25% of employees in half of the enterprises currently utilizing Generative AI.
  • Future Prospects: Set for a dramatic rise, with predictions that 76-90% of employees in 12% of enterprises will adopt Generative AI, underscoring a substantial growth trajectory.

Data and Coding

  • 60.6% of Teams: Utilizing AI for prompt engineering and vector database management (Source: Retool).
  • 47.5%: Applying AI in coding and database management to streamline software development (Source: Retool).

Knowledge and Creativity

  • 36.2%: Enhancing knowledge bases with AI-powered Q&A assistance (Source: Retool).
  • 32.9%: Leveraging AI for creative tasks such as content writing (Source: Retool).
generative AI investments by business functions
               Source: Gartner (October 2023)

In Customer-Facing Roles

  • 43.1% of AI Applications: Focused on improving customer experiences (Source: Retool).
  • Key Impact Areas: Notably in software development, marketing, and customer service (Source: Retool).

The Rise of Retrieval Augmented Generation (RAG)

  • Growing popularity of RAG in AI applications, indicating a shift in AI’s role from operational to interactive user engagement. (Source: Arize Survey).
RAG adoption
Source: Survey: Large Language Model Adoption Reaches Tipping Point

These insights reveal AI as a multifaceted solution, effectively streamlining internal operations and actively enhancing customer experiences. Its role is expanding beyond traditional applications, driving innovation and redefining business practices.

Trend 3. AI's Future Focus: Navigating Growth, Efficiency, and Experience

Growth and customer experience lead, with a strategic shift from cost to value.

As businesses increasingly integrate AI into their operations, a shift in focus and motivations is becoming evident. Let's break down these evolving objectives and strategic shifts:

Primary Business Goals with AI

Generative AI Investment:

Despite the buzz around generative AI, its enterprise investment stands at $2.5 billion this year. While significant, this figure pales in comparison to the larger investments in traditional AI ($70 billion) and cloud software ($400 billion). This discrepancy highlights generative AI's nascent stage in the enterprise sector but also underscores its growing importance and potential for expansion. (Source: Menlo Ventures).

Enterprise investment in generative AI is estimated to be $2.5 billion this year
Source: Menlo Ventures The State of Generative AI in the Enterprise

Gartner's Insights:

  • Growth Initiatives: Leading the objectives with 30%.
  • Cost Optimization: A close second at 26%.
  • Enhancing Customer Experience: A significant focus at 24%.

Retool's Findings:

  • Cost Savings: A primary goal for 38.7% of businesses.
  • Keeping Pace with Trends: Valued by 35.2%.
  • Addressing Customer Needs: A key motivation for 32.9%.
Source: Retool’s State of AI: A Report on AI in Production

These trends indicate a movement away from solely focusing on cost optimization towards enhancing efficacy and tangible business value. The balanced emphasis on cost, growth, and customer satisfaction suggests a maturing perspective on AI's role in business strategy. This approach is likely to foster more sustainable and impactful AI integration in the corporate world. 

Trend 4. AI Implementation: From Secretive Strategies to Open Adoption

91% of businesses choose in-house AI development despite budget challenges.

Businesses' approaches to AI implementation are as diverse as they are strategic. Let’s explore how they're balancing open adoption with resource management:

Open Adoption vs. Discreet Use

Retool's Findings

  • Open Use of AI: A majority, 54%, openly employ AI in their operations.
  • Covert Strategies: A notable 19.7% are using AI secretly, albeit within company policies.

Challenges in Resource Allocation

In-House Development Preference

  • A significant 91% of businesses opting to build their AI capabilities internally (Source: AI Infrastructure Alliance).
91% plans to resource or staff in-house to support future Gen AI
Source: The Hidden Costs, Challenges, and Total Cost of Ownership of Generative AI Adoption in the Enterprise (AI Infrastructure Alliance)

Departmental Investment Focus

  • Product and Engineering Lead: These departments are the primary investors in AI and generative AI within enterprises. The median enterprise spends a higher percentage (4.7%) of its tech budget on AI for product and engineering than the combined spend on all other departments (3.5%). (Source: Menlo Ventures)
  • In-House Development Drives Costs: Enterprises are investing heavily in AI-specialized teams and technologies, and integrating essential third-party tools and infrastructure for AI development. (Source: Menlo Ventures)

Budgeting and Scaling AI

Financial Constraints

  • Only 20% allocating over $2 million annually for AI initiatives, highlighting budgeting challenges in scaling AI projects (Source: AI Infrastructure Alliance).

Future Investment Trends

  • While product and engineering currently drive AI investment, an increase in generative AI investment across various departments is expected as AI solutions continue to evolve and demonstrate added value. (Source: Menlo Ventures).

This section reflects the nuanced strategies businesses adopt in AI implementation. From openly embracing AI to covertly leveraging it within existing policies, companies are exploring various pathways. Additionally, the preference for in-house development, despite budgetary constraints, underscores the importance businesses place on having control over their AI strategies.

Trend 5. AI's Tightrope: Balancing Innovation with Challenges

78% of business leaders see AI benefits outweighing risks.

The integration of AI in business isn't without its complexities. Let's unpack the key challenges and perceptions shaping this journey:

Executive Perception and Decision Making

Gartner's Insight

  • Optimism Prevails: 78% of business leaders believe the benefits of AI outweigh its risks.
  • AI on Executive Agendas: Now a strategic priority in boardroom discussions.

Key Challenges in AI Adoption

Data Management and Environmental Impact

  • Data Management Issues: The top technological inhibitor, cited by 32% (Source: S&P Global Market Intelligence).
  • Sustainability Concerns: A significant 68% are aware of AI’s environmental implications (Source: S&P Global Market Intelligence)
AI and modern infrastructure provide a path to sustainability despite near-term costs
Source: 2023 Global Trends in AI Report (S&P Global Market Intelligence)

The Financial Aspect of AI

  • Cost Miscalculation: Reveals a gap between expected and actual costs, especially in data preparation and ongoing expenses. (Source: AI Infrastructure Alliance).

These findings illustrate the cautious yet optimistic approach of business leaders towards AI. While recognizing its potential, they also face challenges in data management, sustainability, and cost estimation – factors crucial to AI's responsible and effective implementation.

Trend 6. AI's Battle of Titans: Who Leads the Charge?

OpenAI leads the market, with emerging players challenging the status quo.
foundation model market share
Source: Survey: Large Language Model Adoption Reaches Tipping Point (Arize)

In the rapid evolving world of AI technology, key players and emerging trends are actively molding the future landscape. Let’s dissect this competitive arena:

  • Arize's Market Analysis: OpenAI remains dominant with a 59.1% market share among developers and AI teams, while Google's PaLM 2 and Meta’s Llama 2 are making notable inroads, indicating a vibrant and competitive market.
  • Enterprise Preferences: Reflecting a significant trend, 80% of enterprises currently prefer purchasing third-party generative AI software. This preference underscores the confidence in established AI providers and their ability to deliver robust, ready-to-use AI solutions. It aligns with the narrative of major companies not only leading the AI race but also composing enterprise adoption strategies. (Source: Menlo Ventures)
  • Developer Preferences: There's a clear trend towards flexibility, with a significant lean towards third-party public APIs and proprietary models, driven by their adaptability and specialized capabilities. (Source: Menlo Vetures)
2023 has seen incumbents rapidly innovating with generative AI product
Source: Business of AI Report 2023

This financial perspective adds depth to our understanding of the AI market. It not only reflects the technological advancements but also the monetary commitment from enterprises, which is forming the current and future landscape of AI. The investment in generative AI, a fraction of the broader AI and cloud software market, signifies a growing recognition of its potential and its evolving role in various sectors.

Trend 7. The AI Dilemma: Debating Regulation in a Tech-Driven World

Tech world divided on AI regulation: 43.5% against new rules, 14.1% for stricter policies.

The debate around AI regulation and governance is as varied as the technology itself. Let’s dive into the perspectives within the tech community:

Varied Stances on AI Regulation

  • Perspectives from the Tech World (Source: Arize Survey)
  • Maintaining the Status Quo: A notable 43.5% of technical teams favor no new AI regulations, preferring to work within existing frameworks.
  • Call for Increased Regulation: A smaller group, 14.1%, advocates for more stringent AI regulations, reflecting concerns about unchecked AI development and its implications.
Builders Don’t Back AI Regulation
Source: Survey: Large Language Model Adoption Reaches Tipping Point (Arize)

This contrast in opinions reflects the ongoing debate in the tech world about how to best navigate the challenges and opportunities presented by AI. It underscores a crucial conversation about balancing innovation with responsibility, and progress with precaution. 

As AI continues to advance and integrate more deeply into various sectors, these differing viewpoints on regulation and governance will play a pivotal role in molding the future of AI development and its societal impact.

2024 and Beyond: Anticipating AI's Next Leap

As I wrap up these 2023 AI trends, peering into the not-so-distant 2024, I'm struck by the transformative journey we are on. These stats and trends not only chart the current course of AI but also offer glimpses of an exhilarating future. 

With developers and teams rapidly embracing LLM applications and the foundation model market heating up, AI is clearly stepping out of the realm of the extraordinary into the everyday fabric of business and life.

Reflecting on 2023

  • Witnessing the shift from experimental AI projects to production deployment is both inspiring and a bit daunting.
  • Seeing AI weave its way into critical business functions like software development and customer service reshapes my understanding of its versatility.
  • Observing the transition from cost-centric to value-driven AI applications reaffirms my belief in AI's maturing role in business strategy.

The Broadening Reach of AI in 2024

“Executives are taking a bolder stance on generative AI as they see the profound ways that it can drive innovation, optimization and disruption,” said Karamouzis. “Business and IT leaders understand that the ‘wait and see’ approach is riskier than investing.”
Frances Karamouzis, Distinguished VP Analyst at Gartner

As I gaze into the future, here are 7 trends we can expect to see in 2024:

  1. Empowering Small Businesses and Individual Creators: The lowering of barriers means small businesses and individual creators can now access tools once reserved for tech giants. This opens up opportunities for innovation and competition, leveling the playing field in a way that seemed unimaginable just a few years ago.
  2. AI Becomes a Business Staple: By the end of 2024, AI will become an essential tool without which companies might struggle to stay afloat.
  3. AI Democratization: The move towards open-source models will likely make AI development more accessible, leveling the playing field and fostering innovation across the board.
  4. Greater Personalization and Streamlined Processes: AI’s advancement promises more tailored customer experiences and more efficient business operations, a win-win for both customers and companies.
  5. Urgency for AI Governance: The rise of AI will inevitably bring a stronger call for governance. I see this as crucial for ensuring that AI’s growth aligns with ethical standards and societal values.
  6. Balancing Act Between Innovation and Risk: One of the biggest challenges I see is balancing the drive for AI innovation with the need to address risks like data privacy and responsible AI use.
  7. Expect the Unexpected: If history is any guide, we’re likely to see AI breakthroughs that are hard to imagine today, along with unforeseen challenges that will test our adaptability and resilience.

Looking towards 2024, I am filled with a sense of anticipation and a bit of awe at AI's potential to continue reshaping our world. The diminishing barriers to AI adoption are not just technical milestones; they represent a shift towards a more inclusive, innovative, and efficient world. 

The true winners in this AI revolution are the diverse range of individuals and organizations who can now harness its power for growth, creativity, and societal betterment. 

This is the future of AI – more accessible, more versatile, and more impactful for everyone.

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Last Updated

December 15, 2023

Further reading

JD Prater

Head of Marketing

JD writes about his experience using and building AI solutions. Outside of work, you'll find him spending time with his family, cycling the backroads of the Santa Cruz mountains, and surfing the local sandbars. Say hi on LinkedIn.

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