The AI Hype: Companies Talk the Talk, but Few Walk the Walk

Despite the hype around artificial intelligence (AI), new data reveals that only a small percentage of businesses are actually utilizing the technology.

America’s biggest companies have been fervently hyping artificial intelligence (AI) to investors, with nearly half of S&P 500 companies mentioning AI during earnings calls since May, according to an analysis by NBC News. This puts AI on par with the Federal Reserve and interest rates in terms of frequency of discussion. However, despite the hype, a recent survey by the Census Bureau found that only 4.4% of businesses nationwide reported using AI to produce goods or services. This disconnect between talk and action raises questions about the actual implementation and adoption of AI in the business world.

The Rise of AI Hype:

Interest in AI reached new heights following the of OpenAI’s ChatGPT in November 2022. NBC News’ analysis revealed a significant increase in mentions of AI during earnings calls in the quarters immediately after the chatbot’s debut. Companies such as Salesforce have been at the forefront of lauding AI, with CEO Marc Benioff stating during the second-quarter earnings call that the company was leading its customers into “the new AI era.” Salesforce’s investment arm also launched a $500 million generative AI fund to support businesses developing AI models. Even non-tech companies like Walmart and Bath & Body Works have jumped on the AI trend, testing AI-powered search features and machine-learning tools, respectively.

The Reality of AI Implementation:

Despite the widespread discussion of AI, the actual implementation of the technology remains limited. Senior analyst Brian Nagel from Oppenheimer & Co. notes that while AI is mentioned in almost every call he attends, the practical use of AI by businesses is conservative. The Census Bureau survey of 200,000 businesses reveals that only a small fraction of industries have integrated AI into their product offerings. So why the divide between hype and implementation?

Challenges and Limitations:

Nagel suggests that companies may publicly embrace AI hype to demonstrate long-term growth potential to investors. Additionally, the early stages of AI technology pose challenges for businesses accustomed to traditional methods. Kristina McElheran, an associate professor at the University of Toronto, highlights the importance of resources in AI adoption. She explains that education, access to talented employees, and financial resources are crucial for businesses to effectively leverage AI tools. However, these resources are limited, leading to a significant barrier to widespread AI adoption.

The AI Divide:

McElheran’s research on AI adoption in business reveals that the current imbalance is reflected in early adopters clustering around “superstar” cities. This clustering highlights a potential “AI divide” between businesses and cities that can effectively utilize AI tools and those that cannot. While some businesses may struggle to afford and implement AI, others may benefit from the advantages AI offers, creating a gap in competitiveness and access to technological advancements.

The Future of AI:

Despite the challenges, some experts remain optimistic about the future of AI. Mike Loukas, CEO of TrueMark Investments, predicts that over 75% of businesses will utilize AI within the next five to ten years. However, he suggests that most businesses will not directly interact with AI but will instead rely on applications built on top of AI technology. These applications will offer familiar and accessible interfaces, enabling businesses to enhance efficiency and productivity without needing to directly work with complex AI algorithms.

Conclusion:

While AI hype continues to dominate earnings calls and investor discussions, the actual implementation of AI in businesses remains limited. The gap between talk and action can be attributed to various factors, including the early stages of AI technology, resource limitations, and the challenges of adapting to new methodologies. However, experts believe that the future holds promise for widespread AI adoption, albeit in the form of user-friendly applications that enhance business operations. As the AI divide becomes more apparent, it is crucial for businesses to address the barriers to AI adoption and ensure that the benefits of AI are accessible to all.