How Companies Are Spending on AI in 2024

As artificial intelligence (AI) advances rapidly across various sectors, businesses are ramping up investments in generative technology. Despite some early concerns over a potential “AI bubble,” recent reports reveal that AI spending shows no signs of slowing down. From corporate finance to video editing, AI is quickly becoming a cornerstone in business spending strategies.

Here, we’ll dive into the latest findings on how companies allocate resources to AI and where investors are directing their funds. Generative AI continues to dominate the market, attracting attention from venture capitalists (VCs) even as overall tech funding slows down. Additionally, data suggest that AI is driving significant productivity gains, despite mixed results across industries.

Discover more about the latest AI trends in business spending as technology reshapes the corporate landscape.

Generative AI Leads Business Software Spending

According to a recent report by Ramp, a corporate finance management platform, generative AI remains the fastest-growing category in business software spending. Spending on AI vendors increased 38% in Q3 2024 compared to the previous quarter, reaching an impressive $20 million. AI startups now represent half of the top 10 fastest-growing vendors on Ramp’s platform, underscoring AI’s rising importance in business tech.

Among the standout platforms are AI code assistants Cursor, Replit, and Supermaven; video generation tools like Runway and Luma AI; and the development platform LangChain. This rapid growth reflects the high demand for generative AI solutions, which streamline processes in code generation, video production, and software development. Explore how generative AI tools transform business operations.

Ramp’s findings highlight some interesting insights:

Corporate Reliance on AI Tools: ChatGPT, the language model by OpenAI, remains the most popular choice, with businesses choosing it over Anthropic’s Claude 80% of the time. However, more businesses are now opting for multiple large language models (LLMs), with 22% of OpenAI customers also subscribing to Anthropic’s services—a significant increase from just 3% at the beginning of 2024.
Increasing Variety in AI Software: From development platforms to video editing tools, companies are diversifying their AI vendor choices, making AI a staple across departments.

VC Interest in AI Holds Steady Amid Market Slowdown

While the overall VC market has slowed in 2024, AI has been a notable exception, attracting substantial investment. According to Dynamo Software’s latest report, the majority of limited partners (LPs) surveyed plan to increase AI investments in the coming year. Specifically, 72% of LPs intend to allocate more funds to AI, with 37% planning a “very significant” increase.

Key areas of investor interest include cybersecurity, predictive analytics, and data centers. Conversely, fields like autonomous vehicles and computer vision rank lower on investor priority lists. This shift suggests that while AI applications in automation are growing, investors currently see greater immediate potential in predictive and security-focused AI solutions. Learn more about emerging AI sectors that are capturing VC attention.

Mixed Productivity Outcomes from AI Investments

While companies are rapidly adopting AI, the impact on productivity remains a mixed picture. Accenture’s recent report on global business productivity highlights that AI is beginning to yield efficiency gains, albeit with varying results across companies. According to the report, productivity among large companies has largely plateaued, with around 40% reporting negative productivity growth. However, the top quarter of companies—those who invest significantly in technologies like generative AI—achieved productivity increases of more than 8%.

This suggests that while AI can be a powerful tool for improving efficiency, successful implementation requires a strategic approach. Companies that effectively integrate generative AI into their workflows see greater returns on investment, while those adopting AI without clear integration strategies may struggle to realize similar benefits.

The Future of AI Spending in Business

As 2024 progresses, the AI landscape will likely continue to evolve with diverse applications across corporate functions. From development tools and language models to cybersecurity and predictive analytics, companies are rapidly expanding their use of AI. While investments vary by sector, it’s clear that AI is no longer an experimental technology; it has become integral to daily business operations.

With productivity gains, sustained VC interest, and strong demand for generative AI, companies across industries are expected to continue increasing their AI spending. However, the gap in productivity results also points to the need for businesses to approach AI with a clear strategy, ensuring that new technologies align with their specific operational goals.

For more on AI’s transformative effects, visit Times of Tech as we continue to track the latest trends and insights shaping the future of artificial intelligence.