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Business spending on generative AI rose 500% this year, from $2.3 billion in 2023 to $13.8 billion, according to data released by Menlo Ventures on Wednesday.
The report also found that OpenAI ceded its share of the enterprise AI market, falling from 50% to 34%. Anthropic doubled its market share from 12% to 24%. The results came from a survey of 600 IT decision-makers at companies with 50 or more employees, according to the report.
Menlo is an investor in Anthropic. OpenAI did not immediately respond to a request for comment.
The power shift is due in part to the advancement of Claude 3.5 and because the majority of companies are using three or more large AI models, Tim Tully, a partner at Menlo Ventures, told CNBC in an interview. Although OpenAI and Anthropic have dominated the use of AI models in companies, people are “gaming models” and this habit is “not a well-understood piece of data,” he said.
“Developers are very smart, they know how to move back and forth between models very quickly,” Tully explained. “They're choosing the model that best suits their use case…and that's likely to be Claude 3.5.”
deadMarket share remained at 16% and Cohere's share remained at 3%. Google stock rose from 7% to 12%, and Mistral stock lost one percentage point, falling to 5% in 2024.
The report found that enterprise models — such as OpenAI's ChatGPT, Google's Gemini, Anthropic's Claude and others — still dominate enterprise spending, with large language models receiving $6.5 billion in enterprise investment.
The Menlo Report was optimistic about AI agents, a leading trend for the AI and investment space in 2024. Google, Microsoft, AmazonOpenAI and Anthropic are pursuing this technology. AI agents are seen as a step beyond chatbots. They can perform multi-step, complex tasks on the user's behalf, and create their own to-do lists, so users don't have to walk them through the process step-by-step.
“The customer information is real, not just hype,” Tully told CNBC. “I don't think it will necessarily cure cancer, but will it make people more productive and help companies generate revenue? Yes.”
The report found that code generation is the leading use case for generative AI, with more than half of survey responses describing it as the dominant use. Supportive chatbots came next at 31%, followed by enterprise search and retrieval, data extraction and transformation, and meeting summarization.
