The amount of business spending on AI increased by 500% to $13.8 billion, according to Menlo Ventures.

• According to Menlo Ventures' data, business spending on generative AI increased by 500% in 2023, reaching $13.8 billion from $2.3 billion in the previous year.
• The report shows that OpenAI's market share in enterprise AI decreased from 50% to 34%.
• Amazon-backed Anthropic doubled its market share from 12% to 24%.

According to Menlo Ventures' data released on Wednesday, business spending on generative AI increased by 500% this year, from $2.3 billion in 2023 to $13.8 billion.

A survey of 600 enterprise IT decision-makers from companies with 50 or more employees revealed that OpenAI's market share in enterprise AI decreased from 50% to 34%, while Anthropic's market share doubled from 12% to 24%.

Anthropic has an investor named Menlo, but OpenAI did not respond to a request for comment.

According to Tim Tully, a partner at Menlo Ventures, the power shift in AI is partly due to the advancement of Claude 3.5 and the widespread use of three or more large AI models. While OpenAI and Anthropic are the dominant companies in AI model use, Tully noted that people are "juggling models," which is not a well-understood piece of data.

"Tully explained that developers are skilled at switching between models rapidly and selecting the most suitable one for their specific use case, which is likely Claude 3.5."

In 2024, Google's market share increased from 7% to 12%, while Cohere's share remained at 3%. Meanwhile, Mistral's market share decreased from 6% to 5%.

Enterprise investment in large language models, such as OpenAI's ChatGPT, Google's Gemini, Anthropic's Claude, and others, still dominates, according to a report.

In 2024, AI agents are a leading trend and area of investment, with OpenAI and Anthropic pursuing the technology. Unlike chatbots, AI agents can perform multistep, complex tasks on a user's behalf and generate their own to-do lists, allowing users to focus on higher-level tasks without needing to walk them through each step.

"Tully stated to CNBC that the effectiveness of agent technology is genuine and not exaggerated. While it may not cure cancer, it can increase productivity and aid companies in generating revenue."

Generative AI is most commonly used for code generation, with over half of survey respondents citing it as a primary use. Support chatbots came in second at 31%, while enterprise search and retrieval, data extraction and transformation, and meeting summarization followed.