Bessemer Venture Partners’ 2024 State of the Cloud report highlights five key trends shaping the future of the Cloud AI economy, indicating that the reality of AI adoption is outpacing the hype.
Big Tech’s battle over AI foundation models: The report predicts that foundation models will become the new “oil” fueling downstream AI applications, with Big Tech companies vying for market dominance through significant investments in model providers like OpenAI, Anthropic, and others.
AI turning everyone into developers: The rise of AI-powered coding assistants and copilots is making programming more accessible, potentially leading to a dramatic reduction in the average age of technology startup founders by 2030.
Multimodal models and AI agents transforming software interactions: Static text-based chatbots are giving way to multimodal models, with Bessemer placing a specific bet on voice AI apps to experience “breakout growth” in the next 12 months.
Vertical AI surpassing legacy SaaS with new apps and business models: Bessemer strongly believes that vertical AI presents a bigger enterprise value opportunity than legacy vertical SaaS, with AI companies pricing their products on par with legacy SaaS but at a much faster rate.
AI resurrecting the consumer cloud: The consumer cloud space, which hasn’t seen a major exit in eight years, is poised for a resurgence driven by the multimodal capabilities of large language models (LLMs).
Analyzing the implications: Bessemer’s front-row view of the AI industry reveals that, unlike past waves where hype eventually outpaced reality, this time, reality is running faster than the hype. Business executives should recognize that AI startups are already making moves to engage enterprises, but patience is needed as these solutions reach their full potential. Organizations are advised to design for the future in modular ways, allowing for easy insertion of superior AI offerings as they emerge, while maintaining a watchful eye on the AI space to identify and trial suitable solutions early on.