The largest corporations in America are constantly pitching artificial intelligence to potential investors, but recent data indicates that very few companies are actually using the technology.
From May, almost half of the S&P 500 companies have discussed artificial intelligence (AI) in their earnings calls, according to an analysis. Indeed, the frequency of mentions of AI was on par with that of interest rates and the Federal Reserve. But the fervour isn’t being matched by practical application: Only 4.4% of businesses nationwide reported using artificial intelligence (AI) to produce goods or services recently, according to a Census Bureau survey conducted in November.
After OpenAI released ChatGPT in November 2022, interest in artificial intelligence skyrocketed. Businesses that are praising AI include Salesforce, whose CEO, Marc Benioff, stated to investors in August during the company’s second-quarter earnings call that the business was guiding its clients into “the new AI era.” Additionally, Salesforce’s investment division unveiled a $500 million generative AI fund to finance companies creating AI models.
Enterprises beyond the technology sector are also embracing this trend. Walmart and Bath & Body Works both announced in November that they were piloting a machine-learning tool that they hoped would help them win back inactive customers. Walmart also informed investors that they are currently testing AI-powered chat and search features.
According to Brian Nagel, a senior analyst at Oppenheimer & Co. who focuses on consumer and e-commerce companies, he doesn’t hear about AI in any form on any call he attends these days. However, from his perspective, Nagel continued, the real application of AI by companies is “conservative.”
In fact, according to a Census Bureau survey of 200,000 businesses, only a small percentage of these industries have actually used AI in the creation of the products they sell.
Why the division? According to Nagel, businesses occasionally resort to hype in order to demonstrate to investors their dedication to long-term growth. Additionally, because the technology is still in its “very, very early stages,” organizations that have long been accustomed to operating in a certain way may find it difficult to adapt or come up with reasonable use cases.
A more profound explanation can involve resources, or rather, their scarcity.
According to Kristina McElheran, an associate professor at the University of Toronto and expert in the field of how technology impacts business strategy and performance, new technological innovations do not just appear in the economy. McElheran contends that the factors that enable businesses to adopt new technologies are capital, talent acquisition, and education.
In October, McElheran published a study on the adoption of AI in business, which revealed that the high cost of these tools and the low level of proficiency among users prevent many businesses from taking advantage of them at the moment.
It has two sides to it. According to McElheran, certain groups may be left behind by the very things that can truly advance prosperity and progress.
According to McElheran, the imbalance is currently evident in early adopters congregating in what she refers to as “superstar” cities; this, she claims, indicates the impending “AI divide” between companies and cities that can leverage AI tools and those that cannot.
The CEO of TrueMark Investments, Mike Loukas, is more optimistic about the widespread application of AI in the workplace, projecting that in the next five to ten years, “north of 75%” of businesses will use AI. The warning is that not all of those companies will use AI directly. Rather, Loukas thinks they’ll use AI-powered applications that appear recognizable and user-friendly.
For example, a small medical practice may choose to use an artificial intelligence-infused questionnaire tool instead of developing an algorithm to customize its patient portal.
According to Loukas, the typical business owner will not be able to outsource their work to AI. However, there will be programmes available to help [them] manage his company more effectively and smoothly.