Executives Are Pouring Money Into AI. So Why Are They Saying It's Not Paying Off?

Yahoo

25-05-2025

A recent survey by tech giant IBM came to a conclusion that could send shockwaves through Wall Street and the tech sector writ large. The survey asked whether or not company leaders were reporting that their AI initiatives delivered the expected return on investment.
A shockingly small proportion of the surveyed CEOs reported that the tech was delivering on its promises, with only a quarter of the 2,000 respondents answering in the affirmative, while only 16 percent scaled AI across the entire enterprise.
A mere half of the CEO respondents indicated they were realizing value from generative AI investments, indicating the tech may be falling far short of some sky-high expectations and billions of dollars spent.
Tech leaders have long rung the alarm bells about the dangers of fueling an AI bubble, investing in an unproven tech that's still suffering from widespread hallucinations and a propensity to leak potentially sensitive data. As AI models become more powerful, they're also becoming more prone to hallucinating, not less, highlighting that the industry is heading in the wrong direction.
However, company executives are seemingly unperturbed. A whopping 85 percent of the CEOs IBM surveyed expected their investments in AI efficiency and cost savings to return a positive ROI by 2027.
The general fear of being left behind by missing the boat on AI is still rampant.
"At this point, leaders who aren't leveraging AI and their own data to move forward are making a conscious business decision not to compete," IBM vice chairman Gary Cohn wrote in the report. "As AI adoption accelerates, creating greater efficiency, and productivity gains, the ultimate pay-off will only come to CEOs with the courage to embrace risk as opportunity."
But how to leverage AI meaningfully — and convey that vision to workers — is proving extremely difficult.
According to a 2024 Gallup poll, only 15 percent of US employees felt that "their organization has communicated a clear AI strategy." Only 11 percent said they feel "very prepared" to work with AI, a drop of six percent from Gallup's 2023 survey.
Despite pouring tens of billions of dollars into AI investments and supporting infrastructure expansions, companies are still many years out from turning a profit. When, or if, they'll ever get to the point where AI pays for itself remains to be seen.
"Are we using GenAI to solve real problems, or just optimizing slide decks?" Curioser.AI CEO Stephen Klein told Forbes.
In a study commissioned by Microsoft last year, researchers claimed that for every $1 invested in generative AI, companies would realize an average of $3.70 in return, claims that were never externally validated.
How long investors will be willing to prop up an enormous money-burning operation is anybody's guess.
More on generative AI: The US Copyright Chief Was Fired After Raising Red Flags About AI Abuse