AI trends: 2023 recap and insights for what’s to come

The year 2023 marked a breakthrough moment for artificial intelligence (AI) as emergent capabilities of generative models transitioned from niche research labs to the mainstream of desktop computers and mobile phones. Notably, the launch of OpenAI’s ChatGPT became a catalyst for the public imagination, providing a tangible glimpse into the potential of an AI-powered future. This exponential progress coincided with an explosive surge of investment, as AI startups such as OpenAI, Anthropic and Mistral amassed nearly $50 billion from institutional investors and corporate backers. As expected, tech giants aggressively positioned themselves at the forefront of AI, racing to lead the fourth industrial revolution.

Amid the hype, who emerged as winners in 2023? What AI trends and key themes defined the year? And what can we expect from AI looking into 2024 and beyond? Discover the major 2023 developments, analyze which players gained an edge and peer into the crystal ball at what’s next—from burgeoning applications to societal implications.

The market winners

Last year, generative AI (genAI) was the primary driver advancing the understanding and widespread application of AI among the public. The interactive nature of genAI, especially in conversations, had a profound impact, making its practical use accessible to individuals in the workplace and beyond. Historically, the tech sector had the highest engagement with AI tools, but the latest McKinsey Global Survey confirms the integration of genAI into various other sectors. According to the study, 70% of business professionals have engaged with genAI at work or personally, with 22% utilizing it daily [1]. Furthermore, executives foresee it becoming a prominent component of board agendas across industries in the years ahead.

Now, let's explore the winners that benefited most from genAI adoption over the past year. As explored in a previous article, AI enterprise tools, the adage “if you build it, they will come” resonates well with the success of infrastructure vendors that provide the foundation for large language models (LLMs), which are cornerstones in the training of genAI. Among the prominent industry leaders capitalizing on the escalating demand for computing power necessary to scale genAI are key players in both software and hardware. These include:

• Cloud infrastructure: Companies like Google, Microsoft and Amazon are pivotal in establishing the groundwork for AI infrastructure. Notably, “more than half of all funded genAI startups are Google Cloud customers, including 70% of all genAI “Unicorns,” or those valued at more than $1 Billion [2].”
• GPU infrastructure: Producers of graphic processing units (GPU), such as NVIDIA, which controls 80% of the GPU market [3], have experienced increased valuations and surging demand because of genAI. GPU chips play a pivotal role in enhancing overall performance for genAI applications, underscoring their significance for future advancements.

Defining AI trends for 2023

Amid the myriad of AI trends and themes that characterized 2023, four major themes emerged, shaping the narrative and capturing widespread attention:

• Business adoption: Although consumer genAI applications grabbed headlines, 2023 also saw increased business experimentation. Enterprise adoption, startup activity and the proliferation of AI systems modeled after ChatGPT highlighted the rapid expansion of general-purpose AI applications.
• Understanding reasoning: While terms like genAI grabbed mainstream headlines, the mechanics of AI remained a “black box” for many. The crucial question persists: How can we trust AI outputs beyond issues of bias or "hallucinations"? Interestingly, "hallucinate" was named the Cambridge Dictionary’s word of the year in AI-related updates, now encompassing instances where artificial intelligence produces false information.
• Weighing societal risks: The landscape of how AI is reshaping work has left many uncertain about the future of employment. Simultaneously, global AI leaders signed a petition advocating a pause in AI development due to existential risks to humans. Amid these developments, concerns have also risen regarding the undetermined environmental impact tied to the expanding use of genAI.
• Emerging governance: AI regulation emerged as a major talking point at both micro and macro levels. Notably, the US Senate, White House and other influential entities continue to contribute to the dialogue, mainly focusing on responsible use, security and the development of AI. Concurrently, complex legal issues such as copyright, plagiarism and content ownership spurred lawsuits that are only beginning to intensify.

What to expect in 2024 and beyond

As 2023 concluded, many experts, publications and leaders expressed their AI predictions for 2024 and beyond. This includes insights from various sources such as the World Economic Forum (WEF), which featured global leaders’ perspectives and predictions from research experts at IBM, Gartner, Forrester and MIT, among others. Explore four key takeaways from these predictions:

1. Focused AI implementation: In 2023, most companies experimented with open-source AI models trained on massive datasets, adopting genAI in limited ways. In 2024, companies will shift their focus to implementing AI optimized for task-specific solutions. Organizations will focus on training models extensively on niche, proprietary data closely aligned with core business needs, enabling the deployment of AI that delivers targeted value.
2. Bring your own AI (BYOAI): As AI becomes more accessible to individuals, employees eager to boost productivity often adopt AI tools without organizational approval. According to Forrester, the "bring your own AI" trend will accelerate as companies struggle to fulfill employee demand amidst data security concerns. Consequently, organizations will grapple with managing the widespread use of "shadow" AI, AI unauthorized by official policy. While employees bypass security to utilize personal AI, companies face difficult tradeoffs balancing productivity, data risk and policy control.
3. AI goes multimodal: Commercial use of genAI predominantly relied on text-based models with some integration of visual and video for data insights. However, 2024 will witness the rise of multimodal models that seamlessly integrate text, speech and vision, fostering innovative use cases across diverse sectors and enhancing individual and business productivity.
4. Emerging threats: As AI advances, governing bodies could find it challenging to stay current with novel threats. The WEF’s Global Risks Report 2024 identified misinformation and disinformation as their top short-term threats of 2024, encompassing risks such as deepfake videos, voice cloning and the production of counterfeit content. Furthermore, as AI becomes more deeply integrated into our daily lives, concerns about the safety and ethics surrounding our personal data will continue to deepen.

Looking forward

As we reflect on AI's evolution in 2023 and anticipate its trajectory into 2024 and beyond, one certainty remains: change will continue to occur, and fast. Navigating the dynamic landscape of AI calls for organizations to implement strategic approaches to the underlying technology, reimagine the future of work and embrace adaptive, proactive and innovative AI adoption. Drawing from the lessons of past technological innovations, those who embrace change with thoughtful risk mitigation are poised not only to adapt but to thrive in the transformative journey that lies ahead.

References

1. The state of AI in 2023: Generative AI’s breakout year, McKinsey & Company, 2023
2. Leading generative AI startups choose Google Cloud to innovate and scale, Google Cloud, 2023
3. Explainer: Why are Nvidia's shares soaring and what is its role in the AI boom?, Reuters, 2023