Generative AI faces reality check in 2024, analysts say

WORCESTERSHIRE, UNITED KINGDOM — The hype around generative artificial intelligence (AI) is set to fade in 2024 as costs rise and regulation looms, according to predictions by analyst firm CCS Insight.

As the financial and technical challenges of developing generative AI models become clear, the technology will face a reality check.

“The hype around generative AI in 2023 has just been so immense, that we think it’s overhyped, and there’s lots of obstacles that need to get through to bring it to market,” Ben Wood, CCS Insight’s chief analyst, told CNBC.

Generative AI models like OpenAI’s ChatGPT and Google’s Bard require massive computing power, leading to steep company expenses. Tech giants like Amazon, Google, and Meta are designing their own AI chips to try to reduce costs.

“Just the cost of deploying and sustaining generative AI is immense. And it’s all very well for these massive companies to be doing it. But for many organizations, many developers, it’s just going to become too expensive,” Wood emphasized.

The environmental impact of the energy required to run generative AI systems is also a growing concern.

CCS Insight also predicted challenges implementing AI regulations in the European Union (EU). While the EU will likely be the first to introduce specific AI rules, regulations will probably need multiple revisions due to AI’s rapid pace of change.

One prediction is that a search engine will add content warnings for AI-generated material this year to combat misinformation. CCS Insight also expects arrests for AI identity fraud, including deepfakes, with widespread consequences possible.

As generative AI advances, it faces technical obstacles, responsible governance, and managing public expectations.