Business spending on generative AI surged by 500% this year, reaching $13.8 billion, up from only $2.3 billion in 2023, according to data from Menlo Ventures released on Wednesday.
Business expenditures on generative AI experienced a remarkable increase of 500% this year, reaching a total of $13.8 billion, a significant rise from $2.3 billion in 2023, as reported by Menlo Ventures on Wednesday. The report indicates that OpenAI’s share of the enterprise AI market decreased from 50% to 34%. In contrast, Anthropic, which is supported by Amazon, saw its market share double from 12% to 24%.
Business investment in generative AI experienced a remarkable increase of 500% this year, rising from $2.3 billion in 2023 to $13.8 billion, as reported by Menlo Ventures on Wednesday.
The analysis also indicated that OpenAI’s share of the enterprise AI market has decreased from 50% to 34%. In contrast, Anthropic has successfully doubled its market share from 12% to 24%. These findings were derived from a survey conducted with 600 IT decision-makers in enterprises with 50 or more employees, according to the report.
Menlo Ventures is an investor in Anthropic. OpenAI has not yet provided a response to a request for comment.
In an interview with CNBC, Tim Tully, a partner at Menlo Ventures, attributed this shift in market dynamics partly to the advancements of Claude 3.5 and noted that most companies are utilizing three or more large AI models. While OpenAI and Anthropic remain the primary choices for companies’ AI model usage, Tully remarked that users are “juggling models,” a behavior that is “not a well-understood piece of data.”
“Developers are quite knowledgeable — they can switch between models with relative ease,” Tully elaborated. “They are selecting the model that best suits their specific use case… and that is likely to be Claude 3.5.”
Meta’s market share remained steady at 16%, while Cohere’s share held at 3%. In contrast, Google experienced an increase in its market share from 7% to 12%, whereas Mistral saw a decline of one percentage point, dropping to 5% in 2024.
According to the report, foundation models—including OpenAI’s ChatGPT, Google’s Gemini, and Anthropic’s Claude—continue to lead in enterprise spending, with large language models attracting $6.5 billion in investments from enterprises.
Menlo’s report expressed optimism regarding AI agents, which are emerging as a significant trend and investment area in 2024. Major companies such as Google, Microsoft, Amazon, OpenAI, and Anthropic are actively developing this technology. AI agents are considered an advancement over traditional chatbots, as they are capable of executing complex, multistep tasks autonomously and can create their own to-do lists, alleviating the need for users to guide them through each step.
Tully remarked to CNBC, “The agent technology is substantial—it is not merely a trend. While it may not solve major health issues like cancer, it will undoubtedly enhance productivity and assist companies in increasing their revenue.”
The report indicated that code generation is the primary application of generative AI, with over half of the survey participants identifying it as the leading use case. Following this, support chatbots ranked second at 31%, with enterprise search and retrieval, data extraction and transformation, and meeting summarization also noted as significant applications.
