Is AI hype starting to fade? Companies are poised to turn the talk into action in 2024, says Deutsche Bank.

When generative AI products started rolling out to the general public last year, it kicked off a frenzy of excitement and became the most buzzed-about new technology for U.S. enterprises.

Firms on the Russell 3000 index
RUA,
which measures the performance of the 3,000 largest publicly traded U.S. companies, could not stop hyping generative AI to investors on their quarterly earnings calls last year. Earnings-call transcript mentions of generative AI-related topics skyrocketed from “virtually none” in 2022 to nearly 1,000 in the first quarter of 2023, according to data compiled by Deutsche Bank. That number surged further to nearly 3,500 mentions in the third quarter of last year. 

However, Deutsche Bank analysts found that the hype faded somewhat by the fourth quarter of 2023, with corporate-transcript mentions of AI topics slipping back to around 2,500 in calls held that quarter (see chart below).

Deutsche Bank analysts said the decline in corporate mentions may mean the froth is beginning to dissipate as companies turn their focus onto “real-world uses” of AI, rather than “pie-in-the-sky applications.”

Opinion: These Big Tech stocks look to grab the biggest AI market share in 2024

The first place that users are most likely to get their hands on generative AI at work is likely to be in “productivity-enhancing tools integrated into existing software,” rather than in “transformative” applications, Cox and Pozdnyakova said. For example, Microsoft’s
MSFT,
+1.84%
365 Copilot chatbot, which began rolling out for large-enterprise customers in November, offers AI assistance with analyzing, charting and editing Office 365 documents and with catching up on meetings and messages.

Microsoft’s Copilot for Sales and Copilot for Service offerings are set to debut early this year, according to the company. Meanwhile, Alphabet
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+0.86%

GOOG,
+0.58%
is rolling out its own version of task-enhancing tools integrated into existing software — Duet AI for Google Workspace Enterprise. 

“Implementation will take time but it is likely eventually to be very widely deployed and ingrained in workflows,” said Deutsche Bank analysts. “Expect an ‘s-curve trajectory’ rather than a rocket straight up to the moon.”

That is because AI will also collide with the ballot box for the first time since the launch of ChatGPT, which means democracy is about to meet the most disruptive force since at least the rise of social media, said Cox and Pozdnyakova. That would raise tons of questions about the threat of disinformation in this unprecedented year of elections around the world, wrote analysts.

While social media enables the mass distribution of information, generative AI enables the mass generation of content by anyone with a laptop. However, the world may be unprepared for the potential avalanche of personalized advertising, targeted disinformation and ultra-realistic deep fakes, not to mention the more general dilution of accurate information, the analysts said. 

See: AI-powered misinformation is the world’s biggest short-term threat, Davos report says

“Regulation [on generative AI], or its absence, at this pivotal moment will have a permanent legacy,” they wrote.

U.S. stocks were trading lower on Tuesday after the yield on the 10-year Treasury
BX:TMUBMUSD10Y
rose 12 basis points to 4.069%, after Federal Reserve Governor Christopher Waller said the central bank is likely to be able to cut interest rates this year but added that there is no need for the policy to be rushed. The S&P 500
SPX
was off 0.6%, while the Dow Jones Industrial Average
DJIA
was down 0.9% and the Nasdaq Composite
COMP
was slumping 0.5%, according to FactSet data. 

See: AI will have a $1 trillion impact on U.S. economy over next 10 years, study finds