Here are the top ten AI predictions for 2025:
1. **Surge in AI-Native Application Funding**: AI-native startups are expected to break records in funding by the end of 2024, surpassing $45 billion, marking a 70% increase from 2023.
2. **More AI-Native Companies Reach $50M ARR**: Over 30 startups have achieved $25M ARR, a significant rise from the 19 recorded at the beginning of 2024.
3. **Increased AI Financing Exit Activities with Mergers Outpacing IPOs**: In 2025, we anticipate a more vibrant exit environment with the first wave of AI IPOs, though mergers will outnumber them.
4. **Model Improvements Across Multiple Dimensions**: Expect foundational model functionalities to enhance across the board, including better performance in multimodal models and rapid advancements in reasoning models.
5. **AI Agents Gain Traction with Mixed Results**: By 2025, AI Agents are poised to make a tangible impact in customer support, IT, sales, security, and various vertical scenarios, albeit with varying degrees of success.
6. **An AI Arms Race Intensifies**: The defense technology sector is at the cusp of a golden era with investments expected to double in the coming decade.
7. **Explosion of AI-Generated Content with Video in the Spotlight**: The productivity of content creators will reach unprecedented levels as multimodal models progress and generative AI applications become more potent.
8. **Slowdown in “Outcome-Based” AI Pricing Models**: Usage-based growth suggests that by 2025, outcome-based models will account for less than 1% of total enterprise software revenue.
9. **AI-Driven Cyber Attacks Pose Major Security Threats**: We predict a significant AI-driven cyber attack in 2025, inflicting billions of dollars in economic damage to a specific company or government.
10. **Slow Progress in AI Regulation Unless Catastrophe Strikes**: Regulation of AI will advance at a leisurely pace in 2025, barring any major disasters.
**Detailed Insights into the Predictions:**
– **AI-Native Application Funding Momentum**: investor interest in AI companies is just one factor driving the continued growth in funding for AI-native applications.
– **AI-Native Companies’ ARR**: We forecast that at least 50 AI-native startups will generate $50M ARR within the next year.
– **AI Financing Exit Activities**: A busier exit landscape is expected, dominated by mergers over IPOs.
– **Model Improvements**: From multimodal to reasoning, foundational models are set for comprehensive enhancements.
– **AI Agents**: These are expected to make significant inroads across various domains, with inconsistent outcomes.
– **AI Arms Race**: The defense technology sector is poised for exponential growth with AI investments doubling.
– **AI-Generated Content**: A surge in content, with a special focus on video, is set to redefine creativity.
– **AI Pricing Models**: Outcome-based models will see a slowdown, remaining a minor fraction of the revenue pie.
– **AI Security Threats**: An AI-powered cyber attack is anticipated to cause substantial financial harm in 2025.
– **AI Regulation**: Progress will be slow unless prompted by a catastrophic event.
These trends signal a transformative shift in the AI industry, heralding a period of significant change and advancement.
