Since the introduction of ChatGPT in late 2022, businesses have been racing to tap the potential of AI, making it a strategic priority across industries. The 2024 State of Design & Make survey results underscored this enthusiasm, with 78% of leaders saying that AI would enhance their industry.

But the reality of AI hasn’t yet lived up to the hype, according to leaders in Design and Make industries. Sentiment toward AI and other emerging technologies is down significantly year-over-year, with just 69% of business leaders saying AI will enhance their industry—representing a 12% drop from 2024. Industry disruption from AI is also a major concern, with nearly half of leaders now agreeing that AI will destabilize their industry.

This global drop in sentiment across industries signifies that AI is following the classic tech hype cycle, as leaders face the reality of implementation, an ongoing technical skills shortage, and the limitations of the current technology.

“When generative AI first appeared, there was an excessive sense of expectation towards generative AI and AI in general, and I think that we have just passed the peak of that,” says Fumihiro Ojima, general manager, Digital Innovation Department, Value Creation Office, Tokyu Construction Co. Ltd., a Japanese civil engineering and building construction company. “There was an impression that generative AI could do anything, but, in fact, there are things that it is suited to and things that it is not suited to, and I think that we have finally come to understand that.”

Nearly half (48%) of leaders and experts agree AI will destabilize their industry, up from 41% in 2024 and representing a 20% year-over-year increase. This indicates leaders are becoming more concerned about AI and emerging technologies as their implementation in their industry, and at their organizations, grows.

From the standpoint of digital maturity, there is a stark difference in perceptions of disruption. Digitally mature companies are far more likely to say that AI will destabilize their industry (56%) compared to less digitally mature companies (40%). This makes sense when considering that digitally mature organizations would likely have more processes, systems, and workers impacted by AI implementation.

Concern about disruption is up and overall positivity about AI has dropped significantly from 2024. Most notably, trust in AI technology for Design and Make industries has decreased 11 percentage points year-over-year, representing a 17% change in sentiment. 

One of the many reasons for this sharp decline is concern about cybersecurity incidents; privacy issues; biased or harmful outcomes; and limited control over how, where, and when their data is used. For example, organizations struggle to manage how to use third-party AI tools without exposing their sensitive data or sensitive customer data. Also challenging is the implementation of AI solutions across the organization, both in terms of time and money. In interviews, leaders said that in some industries or regions, AI regulations are lagging behind the pace of technology, leaving businesses in a difficult position when it comes to implementation, limitations on use, and liability.

In 2024, leaders were confident about progress toward reaching their AI goals, with 56% saying they were approaching or had already achieved their goals. This year, as leaders are faced with the complexities of implementing AI solutions across their organizations, they are rethinking where they are on their AI roadmaps.

Only 40% of leaders say they are approaching or have achieved their AI goals, a 16-point decrease that represents a 29% decline year-over-year. Leaders are more conservative this year when estimating their progress, with a 37% year-over-year increase in leaders who say they are in the early or middle stages of their AI journey. Along with other survey results, this finding suggests that leaders could be struggling to progress with AI as they encounter a confluence of cost, talent, and time concerns, and that the technology is not quite mature enough to easily implement across organizations as leaders hoped.

Their response is to invest, but there is a stark divide in who is betting big on artificial intelligence. Seventy-seven percent of leaders at digitally mature organizations say they will increase investment in AI, compared to 59% at less digitally mature companies. These increased investments could lead to outsize benefits for more digitally mature organizations that are already seeing benefits in hiring, productivity, and innovation from digital transformation efforts.

Despite implementation challenges and a dip in sentiment, Design and Make leaders are still optimistic about AI’s potential. When asked how their organization’s investments will shift over the next few years, 68% of respondents say their investments in AI will increase. And while AI and emerging tech investments are down 9 points from 2024, this represents a smaller dip than the average 13-point overall decrease in future investments.