Bubble or Boom? Answer Depends on AI Adoption, Microsoft CEO Says

He’s not saying it is a bubble, but Microsoft CEO Satya Nadella knows what one would look like. 

Speaking at the World Economic Forum in Davos, Switzerland, on Tuesday, the Microsoft CEO said whether there’s an AI bubble depends on one not-so-surprising factor: adoption rates. “For this not to be a bubble by definition, it requires that the benefits of this are much more evenly spread” beyond just AI firms and the tech industry, Nadella said. Early indications suggest the industry may have its work (human, AI-driven or otherwise) cut out for it to achieve that.

In the Business of Business

In PwC’s 29th Global CEO Survey, published this week, just 12% of top bosses said AI has delivered both cost and revenue benefits for their organizations, and more than half (56%) say they have seen no significant financial benefit from it. That dovetails with an MIT report last summer that found 95% of firms reporting zero returns on their own AI pilot programs.

Thankfully for Nadella and the rest of the AI eggheads in Silicon Valley, PwC’s report also offers a roadmap for successful AI deployment:

• Per the survey, CEOs who reported both cost improvements and savings gains from AI were around 2.5 times more likely to say their companies have integrated AI across operations, from strategic decision-making to products and services.
• Meanwhile, organizations that established “strong AI foundations” were three times more likely to report meaningful financial gains. Translation: Companies seem to be getting out of AI what they put into it.

“AI moves so fast … that people forgot that the adoption of technology, you have to go to the basics,” PwC global chairman Mohamed Kande told Fortune on Tuesday.

Spread The Wealth: AI firms, meanwhile, are grappling with a fundamental business question of their own: how to make money. Last week, OpenAI announced plans to start testing ads in the US for its free and low-cost Go tier worldwide. In Davos this week, Google DeepMind CEO Demis Hassabis told independent tech journalist Alex Heath the company has “no plan” of its own to put ads in Gemini, adding, “It’s interesting [OpenAI has] gone for that so early … Maybe they feel they need to make more revenue.” Perish the thought!