Decoder with Nilay Patel AI is a money pit — here’s why investors don’t mind
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Dec 5, 2024 
Tim Tilly, a partner at Menlo Ventures, and Nathan Benaich, the founder of Air Street Capital and author of the State of AI Report, dive into the massive investments flooding the AI sector while profits seem elusive. They discuss the dramatic rise in AI spending—from $2.3 billion to $13.8 billion—and the challenges in ROI. The guests also explore the emergence of AI agents that promise efficiency but come with economic considerations, and they highlight the optimism for future advancements in AI technology despite current financial hurdles.
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AI Spending Surge
- AI spending surged 500% to $13.8 billion in 2024, up from $2.3 billion in 2023.
- This growth is driven by increased investment in AI applications across various sectors, including legal, fintech, and healthcare.
AI Application Adoption
- Companies are increasingly adopting AI applications within specific departments like IT, R&D, and Go-to-Market.
- Verticalized AI solutions are also gaining traction in sectors like legal, healthcare, and finance.
Shifting Market Share
- OpenAI's market share in enterprise AI decreased, while Anthropic's doubled.
- This shift is attributed to Anthropic's strength in code generation and its suitability for specific use cases.