Predictions from top investors on AI in 2024

By Fortune Term Sheet January 3, 2024

From the article:

Mark Sherman, Managing Partner at Titanium Ventures shares his insight on how AI will affect Google, Meta and Microsoft in 2024.

Venture capitalist predictions for the year ahead coalesced around shifts in funding models from the previous year, the evolution of AI’s role in the corporate landscape, AI’s impact on jobs, and broader societal impacts. Venture capitalists question whether there is excessive hype – or not enough hype – surrounding AI or if the scope of its potential is being overlooked or minimized, and what areas of AI hold the capacity for the greatest advancements in 2024.

In assessing funding realities, VCs noted that the novelty factor for AI investments will diminish. VCs will pull back on funding for cash-burning startups, leading to bankruptcies or acquisitions for some, while others with strong product-market fit will thrive. Overhyped expectations and experimental budgets from the previous year may lead to significant churn among AI companies, with a greater focus on measurable ROI. VCs anticipate a more discernible emphasis on AI applications that effectively address real customer needs and tackle fundamental business challenges head-on. Platforms that demonstrate exceptional capabilities in these areas will emerge as market leaders, potentially revolutionizing how businesses solve problems.

AI’s impact on jobs and integration into existing workflows remains prominent in the discussion. Mark Sherman, managing partner, Titanium Ventures, notes, “Google, Meta, and Microsoft will continue to grow revenues, but they will have roughly 10% fewer employees five years from now as AI productivity improvements cannibalize growth and absorb support, marketing, development, and administrative roles. At the same time, slowing revenue growth rates will drive campaigns to find operating expense efficiency.” 

As companies re-envision workflows, efficiencies and capacities through the lens of AI, VCs also emphasize that ethical and safety concerns will remain pivotal considerations in 2024. AI applications focused on bolstering system security and threat detection will gain greater prominence and become more appealing to corporations and funders. They anticipate that as GenAI is utilized for misinformation campaigns, regulatory intervention will become necessary.

In short, VC predictions forecast continued volatility, opportunities, challenges, and undoubtedly more than a few surprises as the AI landscape continues to evolve.