EY survey shows big intentions, but warns that impact may be limited
Business leaders are intending to ramp up their investment in artificial intelligence, but there are concerns that the impact of the technology may be overstated.
A new report from EY shows that leaders are becoming more bullish on their intentions for AI with most of the 95% of respondents who are already using the technology reporting that they are seeing a return on their previous investments. The number of businesses investing more than $10 million is set to double in 2025 to 30%.
But concerns have been raised by Goldman Sachs that those investors allocating more to AI related stocks may be paying too much with little to show for their money. There are questions being asked about the speed of adoption of AI.
Goldman strategists led by Ryan Hammond suggest that the ‘hyperscalers’ – those megacap tech firms betting big on the proliferation of AI – cannot pile capital into the technology without providing more evidence that it will pay off.
“Today’s hyperscalers will eventually be required to prove that revenues and earnings will be generated from their investments,” Hammond wrote in a note. “Early signs that may not be generated, could lead to valuation de-rating.”
EY’s AI Pulse Survey asked 500 senior leaders in the US about the AI adoption and found that three areas are producing significant ROI:
- Operational efficiencies (77% said this)
- Employee productivity (74%)
- Customer satisfaction (72%)
"The world in which we do business has been forever altered by the emergence of generative AI," said Dan Diasio, EY Global Artificial Intelligence Consulting Leader. "Nearly all companies are investing in AI, but we're seeing a divergence between companies experimenting in small ways and those making larger investments, with the leaders who continue prioritizing investments in AI increasingly ahead of the pack and experiencing positive returns."
Those firms investing at least 5% of their total budgets to AI are seeing the strongest returns.
However, the report highlights a lack of investment in the AI infrastructure with firms risking their investments “cracking and crumbling beneath them.”
EY says that data infrastructure, governance of AI usage, and talent attraction and retention are key concerns.
"AI is clearly moving out of the hype phase and firmly toward being a viable means of productivity for organizations," added Gusher. "As we move into the next phase of full-scale AI integration, leaders will need to develop a holistic strategy that completely reimagines the entire enterprise system to create an AI-centric business that best harnesses the transformative power of the technology."
The report is unlikely to quell the nerves of those who believe there may be too much hype and not enough tangible benefit to high exposure to AI stocks.
One of the experts in Goldman Sachs’ report suggests that investors may have to be patient to see more than the short term spikes in AI related investments.
“Given the focus and architecture of generative AI technology today... truly transformative changes won’t happen quickly and few—if any—will likely occur within the next 10 years,” wrote Daron Acemoglu is Institute Professor at MIT and author of Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity. He is bearish on the upside to productivity that AI will deliver over the next decade and possibly beyond.
