AI’s 2025 Reckoning: Breakthrough or Bust?

AI has captivated investors, who’ve poured over $1.4 trillion into data centers and tools since ChatGPT’s 2022 debut. Yet only 5% of U.S. businesses report using AI in products, and energy-intensive training costs loom large.

While AI adoption grows — often in secret as employees automate tasks without management’s knowledge — investors’ patience might wane if tangible breakthroughs lag.

Industries like IT are leading adoption, while others face hurdles like retraining and integrating AI into workflows. Promising advances include “agentic” systems capable of complex planning and potential milestones like AI-driven drug development. However, challenges persist, from limited training data to mounting geopolitical competition, with Chinese engineers excelling under resource constraints.

Will 2025 be the year AI balances its hype with real-world results? Probably not. Although AI will be everywhere, it will not yet bring the returns investors are waiting for. These returns will likely happen in 2026 or 2027 when the majority of large companies have entered the AI space.

Read the full article on The Economist.

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