CEOs worldwide look to bet big on generative AI in 2024

25 January 2024 3 min. read

Around the world, CEOs have shown an eagerness to wager big bets on generative AI (GenAI) this year. The benefits are clear to see – and business leaders worry that if they do not move quickly, they will be left behind.

Nearly every CEO (99%) surveyed in a study from consulting firm EY said that they plan to invest significantly in GenAI in the near future. But despite that unanimous certainty on the value of AI, the investment landscape is pretty complicated. A total of 68% of CEOs say they feel stymied by uncertainty around this space and have faced challenges in acting quickly.

As far as making progress on AI initiatives, 92% of CEOs reported that they have booked “some progress” on key GenAI use cases over the past twelve months. Despite that progress, over 8 in 10 leaders said that still more work needs to be done in finalizing the integration of their kicked off AI initiatives.

CEOs worldwide look to bet big on generative AI in 2024

Source: EY, CEO Outlook Pulse

Most CEOs reported that they believed it would take three to five years before AI would have a number of different impacts on their organizations. Those desired impacts include things like redefining their business, changing internal functions, and driving revenue growth.

Notably, 14% said that AI is already having a significant impact on how their internal functions operate, more than the other categories.

CEOs worldwide look to bet big on generative AI in 2024

Source: EY, CEO Outlook Pulse

One interesting revelation from the survey is that M&A appetite is now at a nine-year low, with CEOs doubling down on organic investments. Only 35% of CEOs noted that they are planning a merger or acquisition within the next 12 months. Besides inflation and geopolitical tensions leading to financial prudence, it could also be a sign of an overhyped AI scene.

The proliferation of companies claiming AI expertise has made choosing partnerships and acquisitions more complicated. Two-thirds of CEOs (66%) acknowledged in EY’s report that there has been a sharp increase in companies claiming to have AI expertise.

For that reason, identifying credible suppliers, partners, or M&A targets has become harder. While CEOs are evaluating the influence of AI on their business model and operations, they must also scrutinize any potential acquisitions with the AI angle in mind.

“The lower level of deal intentions could be attributed to the uncertain geopolitical and economic environment. Further, among the many priorities, corporates are following a more measured approach to capital allocation and portfolio optimization, as CEOs are tapping on M&A opportunities to build capability in technology and AI rather than meeting growth ambitions,” said Sriram Changali, partner at EY-Parthenon.

AI has taken the business world by storm in the past several years, with leaders looking to harvest the hugely beneficial technology as it slowly ripens to maturity. A previous study found that GenAI could in the coming years add up to $4.4 trillion in productivity annually worldwide. This remarkable promise reflects the wide-ranging impact that AI is seen to have on nearly every sector, with the potential applications being truly as varied as one can imagine.

Overall, the resulting picture painted by the EY survey is that CEOs know very well how important AI and GenAI are and will continue to be for their organizations. But despite that knowledge, some business leaders are still grappling with how to proceed in what, for many, is still unfamiliar territory.