Every year, Stanford University’s Institute for Human-Centered Artificial Intelligence releases a big report about the status of the artificial intelligence industry. This year’s report, published this week, is a whopping 502 pages and includes a wealth of insights on the trendy technology. Tucked into its section on the economics of the AI industry is the surprising revelation that global corporate investment in AI actually dropped last year for the second straight year in a row.

This might come as a surprise to some since 2023 was largely considered to be a period of peak AI hype. New chatbots and companies spawned aplenty, as top executives spread hyperbolic rhetoric about the technology’s potential. And yet, the new HAI report notes that in 2023, total investment in AI...

...dropped to $189.2 billion, a decrease of approximately 20% from 2022. Despite a slight reduction in private investment, the most significant downturn occurred in mergers and acquisitions, which fell by 31.2% from the previous year. However, over the past decade, AI-related investments have increased thirteenfold.

The peak of global corporate investment in AI was actually 2021, according to the report. During that year, total investment crested $337 billion. In 2022, it then dropped to $234 billion, before dropping another $40-ish billion last year.

That said, the U.S. is still pouring money into AI at a rate that dwarfs all global competitors, and more AI companies launched last year than ever before. The report notes that U.S. investments in artificial intelligence last year were “nearly 8.7 times more than” that of China, which is the next highest investor, globally. Meanwhile, the U.S. saw 897 newly funded AI companies last year, which, again, vastly outpaced China, which only saw 122 new companies launched.

The report also notes that, according to a survey conducted by McKinsey, organizations that did deploy AI last year saw drastic reductions in costs and boosts in revenue, which, as the report puts it, suggests “AI is driving significant business efficiency gains.” In general, “business efficiency” just can’t help but sound like a coded term for laying off humans and replacing them with an algorithm. The report notes that the “most commonly adopted AI use case by function among surveyed businesses in 2023 was contact-center automation,” with 26 percent of surveyed businesses saying that’s their primary use for AI.