Business spending on generative AI has exploded to $13.8 billion in 2024, up 500% from $2.3 billion in 2023, reports a new report by Menlo Ventures. The dramatic growth in investment underscores the quickening pace of adoption for AI technologies across different industries based on the growing demand for enterprises to develop advanced AI solutions.
This report, based on a survey of 600 enterprise IT decision-makers in companies with at least 50 employees, marked another significant shift in the market dynamics, following the AI sector. Long the market leader for generative AI, OpenAI has seen its share of enterprise applications decline from 50% to 34%.
Meanwhile, Anthropic, an AI startup backed by Amazon, has experienced significant growth, doubling its share from 12% to 24%. Meta, Cohere, and Google also maintain notable shares, with Google’s market presence rising from 7% to 12% this year.
Tim Tully, a partner at Menlo Ventures, attributed the shift to the rising popularity of Claude 3.5, Anthropic’s latest AI model, which is gaining traction among developers for its efficiency and versatility. Tully noted that most companies now use multiple AI models, creating a dynamic landscape where developers are selecting models based on their specific use cases. “Developers are pretty savvy—they know how to go back and forth between models fairly quickly,” he explained in an interview.
In terms of overall investment trends, the report highlighted the growing prominence of foundation models—such as OpenAI’s ChatGPT, Google’s Gemini, and Anthropic’s Claude—among enterprise users.
Large language models drive most of the spending in AI, which had $6.5 billion explicitly channeled toward those specific technologies.
The focus area for 2024 is in the development of AI agents, which truly go beyond chatbots, as they perform multi-step tasks independently-for example, the development of to-do lists or workflow management. They promise quite high productivity gains to enterprises. Tech giants such as Google, Microsoft, Amazon, OpenAI, and Anthropic are heavy investors in AI agent technology; they consider it a pivotal innovation that will help optimize operations and increase top lines.
The report further indicated code generation as the leading use case in generative AI, with more than half reporting it as the main application. Other common uses of generative AI include support chatbots, enterprise search and retrieval, and data extraction.
The sharp increase in spending has underlined the rising importance of AI in the business world, as companies continue to rely on these technologies to improve productivity and drive innovation.
