Data Insight May 31, 2024

88% of CEOs Have an AI Vision but Only 25% Are Seeing Returns. Why?

The majority of CEOs are talking about their AI/ML vision in earnings calls but just 25% are seeing it drive revenue growth and gross margins now. Aligning current reality with future vision is vital to unlocking AI ROI – unsurprisingly, the tech industry is leading the charge. 

Greta O'Marah Avatar
Greta O'Marah
Regenerative Business Planning

The Data

  1. 1

    88% of CEOs have a vision to integrate AI/ML into all of their functions in 2024. However, only 25% of them have said that AI/ML is driving revenue growth and gross margins now.

  2. 2

    Of the 25% of brands seeing returns now, 66% are in the tech industry.

The AI Vision/Reality Mismatch   

In 2023, mentions of AI in earnings calls by S&P500 companies hit a high, and global spend across all industries increased by an average of 27% (to $154 billion in 2023). In 2024, this is estimated to hit $184 billion, with 47% of tech companies citing AI as their top budget item. GenAI is emerging as a key investment area, with over 70% of CSCOs planning to experiment and/or invest in it over the next three years. But despite heavy investment and ambitious goals, the practical application and management of new tech are not aligned with vision.  

Our research shows that 83% of CSCOs overwhelmingly cite supply chain as directly accountable for business results, but only 42% of them are able to plan six months into the future, indicating a disconnect between current expectations and reliable delivery. 44% of executives are discussing AI/ML (2.2x as much as Q1 of 2023), with 88% of these companies aiming to incorporate AI/ML across all operations in 2024. However, only 25% reported that AI/ML is directly contributing to revenue growth and improving gross margins in 2024.

Of that 25%, 66% are tech companies.   

Ring chart showing share of CEO mentions (In earnings calls) of how AI drives revenue by industry.
Source: Zero100.

Tech Is Winning... and the Prize Is Revenue   

Tech vendors supplying supporting tools to bigger tech entities have been the first to report increased revenue as a direct result of the use of AI. Defense and intelligence software company Palantir reported a revenue increase of 20%, crediting the “surging demand” for AI as the cause. Chip designer Arm reported a revenue increase of 14%, pointing to customers like Google and Microsoft (who need significant computing power) as critical to their success.

In turn, the tech giants behind the success of these vendors are seeing increased value, too. Alphabet reported a 15% revenue increase for the first quarter of 2024, citing the once-in-a-lifetime AI opportunity as the reason for its success. Amazon reported a 13% revenue increase in Q1 of 2024 and said in an earnings call “that genAI will be a 'pervasive focus' for investment and is expected to drive 'tens of billions of dollars of revenue' over the next several years.”   

The Takeaway  

As AI pilots scale and investments in updates, improvements, and new projects ramp, the need for transparency around results and the matching up of reality with vision will only continue to grow. Embrace this by defining your mission specifically and work back from there, creating a roadmap to track progress and results. Consider writing a PR/FAQ (Press Release/Frequently Asked Questions), which we explain and templatize in the Appendix of our report on SHEIN, as a guide.  

To see a different data cut or to dig deeper into this topic, reach out to our Head of Research Analytics, Cody Stack, at Cody.Stack@zero100.com.   

Methodology   

Zero100’s proprietary data and analytics are a combined effort between our data scientists and research analysts. We provide data-first insights matched with our own research-backed points of view and bring this analysis to life via real-world case examples being led by supply chain practitioners today.    

For this study, we surveyed 312 supply chain professionals, including CSCOs and COOs. Respondents include supply chain professionals from companies with an average company revenue of over $1 billion. Seniority of position ranges from Senior Director to C-suite. Respondents work across all functions and all regions, with the majority based in the USA. We also analyzed 1,271 earnings calls from 150 brands from Q1 2024.