As CEOs are closely watching geopolitical, macroeconomic and market risk, and the continued high cost of capital, EY survey shows CEOs expect higher growth in revenue and profitability in 2024 compared with 2023, some of which to be invested in Generative AI.
In a survey conducted by EY, CEOs profitability expectations for their companies are overshadowing economic fears; however, they remain cautiously optimistic on adopting generative artificial intelligence technology.
“CEOs are in a quandary. While 62% agree their organizations must act now on GenAI to avoid giving competitors a strategic advantage, 61% say uncertainty around GenAI makes it challenging to develop and implement an AI strategy,” wrote EY.
EY explains that while business leaders are optimistic about the promise of GenAI strategy to accelerate business transformation, the geopolitical uncertainty could dampen the profits which can impact the investments.
The consultancy explains that given the AI buzz, CEOs are creating muilt-layered investment strategy for 2024 with Research and Development (R&D) the most likely to see higher investment.
“While 62% agree their organizations must act now on GenAI to avoid giving competitors a strategic advantage, 61% say uncertainty around GenAI makes it challenging to develop and implement an AI strategy,” EY explains.
“With the speed of AI developments, the cost involved, ethical considerations, potential regulatory scrutiny, and other uncertainties, funding plans for now are multilayered: 37% of CEOs plan to reallocate capital from other investment budgets, 34% say they will primarily raise new capital, and 26% indicate they will reallocate capital specifically from technology budgets,” they added.
Companies are considering the investments required to build AI capabilities that can assist their business needs; which throws different other choices and challenges in their GenAI strategy. These include: whether to use open-source or proprietary large language models (LLMs) for their AI systems, and whether to build, buy or partner on their AI systems. Many businesses may claim they have AI experience.
EY said that 55% of CEOs agree it’s hard to identify credible partners or acquisition targets.