AI's ongoing boom appears poised to accelerate, highlighting the imperfections and risks of the relatively novel technology. |
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A rush of new generative artificial intelligence products in 2023 brought new attention and fresh concerns about the emerging technology
OpenAI LLC's ChatGPT and the integration of AI capabilities into established software products, such as Microsoft Corp.'s launch of AI tool Copilot for its suite of software, have pushed AI into the forefront this year. A burgeoning industry has been born, with more than 1,500 companies exclusively operating in the AI software space globally, according to S&P Global Market Intelligence data.
That boom has led to new scrutiny centered on how AI is being used, with particular emphasis on whether its implementation threatens to eventually plunge entire professions into obsolescence.
"As the early experimentation phase of GenAI transitions into an early implementation phase in 2024, many companies are not sure how transformative GenAI will be, while others are charging ahead," said Nick Patience, lead analyst for AI and machine learning research at Market Intelligence. "They will still be looking to identify the most viable use cases, while vendors will be turning experimental features into usable products."
Growing interest
Though tech companies are spearheading the adoption of AI tools, the sector is far from alone in that pursuit. Consumer companies are scrambling to incorporate and tout their use of AI tools in both consumer and nonconsumer-facing applications.
Executives at S&P 500 companies are increasingly discussing the potential of the technology during investor presentations and earnings calls. A Market Intelligence review of S&P 500 transcripts found nearly 2500 mentions of AI during earnings calls in 2023, nearly 10x the comparable figure a year ago.
Focusing just on generative AI, the run-up in interest has been even more sudden. Market Intelligence recorded just seven mentions of the technology in the fourth quarter of 2022 — the first period of any mention of generative AI since the start of 2017. Interest has since skyrocketed, reaching more than 400 mentions during third-quarter 2023 earnings calls.
Following its 2021 acquisition of AI company Dragontail, Yum! Brands Inc., which operates fast food brands KFC, Pizza Hut and Taco Bell, has implemented an AI-driven production and delivery sequencing platform at nearly 1,400 US Pizza Hut stores and is using AI to manage inventories across 7,000 restaurants.
The latter application "predicts and suggests the quantity of each product a restaurant general manager should order," CFO Christopher Lee Turner said on a Nov. 1 earnings call.
The Coca-Cola Company was also taking "bold steps" in that direction, said Chairman & CEO James Robert B. Quincey during an Oct. 24 earnings call. Those steps include a drink flavor co-created with AI and the use of generative AI to better understand market data and trends.
Market revenue generative AI — just one application of artificial intelligence — is expected to grow to $38.6 billion by 2028 from $3.88 billion this year, according to Market Intelligence Research forecasts.
Growing concerns
"The episode will encourage those seeking tighter regulation of AI, including the US government, in part because it has highlighted how a very small number of people control what is a very important piece of AI technology infrastructure," Market Intelligence's Patience said.
In the aftermath of OpenAI's troubles, heightened public awareness of the perceived risks surrounding AI will likely put further pressure on legislators, Patience said.
Countering that skepticism alleviating concerns about AI and explaining its potential to positively contribute to society will require a three-pronged approach, according to Aarti Singh, director of the AI Institute for Societal Decision Making at Carnegie Mellon University.
"Building trust requires improved AI systems that rely on not only accurate algorithms, but algorithms that are fair, transparent, safe, ethical and where accountability is built in; participatory design with stakeholders throughout the entire machine learning pipeline; and creating awareness via education, reskilling and outreach to stakeholders including the public so they understand what AI can and cannot do," Singh said.
What is shaping the general public's perception of AI may not always be an accurate or realistic depiction of the technology's current capabilities.
"AI is only as good as the data we feed into it and any prior knowledge we bake into it. Expecting it to do well beyond what is given as input is misconstrued," Singh said. "For this reason, general artificial intelligence is as far away as reaching the end of our universe right now."
Regulatory changes
AI tools are being implemented across a broad swath of the corporate world and are gradually seeping into the everyday lives of many Americans, but legislation governing the use and safety of AI has lagged.
In the US, efforts to establish a federal framework for AI are still in their infancy, remaining confined to extra-legislative actions. In late October, President Joe Biden issued an executive order covering AI safety, actions to protect and benefit American consumers and workers and steps to foster innovation and global cooperation on AI.
The administration also published a plan on federal investments in AI research and development in May, but has yet to regulate AI through the standard legislative process.
The European Union is, comparatively, significantly further along in the process of enacting a law to govern AI. Following talks among member states, the EU plans to sign its landmark AI Act into law before the end of the year.
"We expect the EU's AI Act to become law and while we don't expect the US to adopt a similar law at the federal level — after all, passing legislation like this in an election year will be extremely difficult — we expect more hearings" said Patience with Market Intelligence.