AI Return On Investment Just 2.5% Last Year, Lower Than Generalist Tech

Even as a tidal wave of investment sloshes into AI-related products and services, ROI for the AI sector was anemic - a little more than half of those for video games, fintech, cybersecurity cloud computing and some other tech related industries. ROI for deployed AI projects was down 9.4%.

This does not mean that AI has 'failed,' like the metaverse, but it does suggest that the ongoing problems and challenges like data quality, accuracy and cost - to say nothing of emergent Chinese competitors - may mean that the sugar plum financial returns VCs have been promising are not going to be immediate. JL

Elizabeth Greenberg reports in Digit News:

The average return on investment (ROI) for AI-focused investment was just 2.5% in the last year despite attracting $110 billion in global investment. The mean number of deployed AI projects that have shown meaningful ROI dropped 9.4%. Generalist tech firms beat out the AI sector, with 4.3% returns on their investments on average. Other industries – video games, fintech, cybersecurity, cloud computing, and payments had higher returns on their investments when compared to AI. “AI remains a hugely exciting sector but it pays not to be too overweight in a sector and certainly not a sector where it becomes hard to justify valuations.”  Investors may have to be patient to see monetary ROI from AI investments.

“AI remains a hugely exciting sector but it pays not to be too overweight in a sector and certainly not a sector where it becomes hard to justify valuations,” said Jonathan Webster-Smith, chief investment officer at Bowmore. 

 

The average return on investment (ROI) for AI-focused investment was just 2.5% in the last year, data from Bowmore Asset Management shows.

 

AI investment was outperformed by other industries and general funds in terms of its returns, despite attracting an estimated $110bn in global investment in 2024.

Generalist tech firms beat out the AI sector, with 4.3% returns on their investments on average. Other industries – video games, fintech, cybersecurity, cloud computing, and payments all had higher returns on their investments when compared to AI.

The results may be inflated by AI’s high valuations and relatively recent entry into the investment foray. As the emerging technology progresses and takes further hold, investors may see greater returns in the near future as speculative valuations solidify.

“AI remains a hugely exciting sector but it pays not to be too overweight in a sector and certainly not a sector where it becomes hard to justify valuations,” said Jonathan Webster-Smith, chief investment officer at Bowmore. “AI companies had seen such a strong run in their share price that the sector had tempted investors away from some of their core principles such as diversification.” Previous research from 2024 also found the same trend: mean number of deployed AI projects that have shown meaningful ROI dropped 9.4% according to a report from Appen.

However, the tides may be changing in different industries – research into CX found that more and more companies are seeing a return on their investment in integrating AI into their companies.

AI appears to not be going anywhere, and investors may just have to be patient to see monetary ROI from AI investments. Within companies, however, organisations are seeing returns on productivity and ROI, though a lack of training appears to be holding some benefits back.

The AI investment landscape has also seen a shakeup after the introduction of DeepSeek’s AI chatbot that offers similar capabilities to OpenAI’s GPT models with a much smaller price tag and associated power requirements.

Patience may be running thin for investors waiting to see the benefits of AI across industries as the technology improves productivity, but faces hurdles when it comes to data, governance, and regulation.