AI industry could be in for a 'cold shower' next year: analyst

• Analyst firm CCS Insight is predicting a "cold shower" for generative AI in 2024.
• The firm's chief analyst told CNBC he believes the technology is overhyped and faces immense costs to deploy.

An analyst firm is predicting a "cold shower" for generative AI in 2024.

CCS Insight, a London-based tech analytics firm, expects that the very real challenges of cost, risk, and complexity in AI could soon overshadow the technology's current hype in 2024, CNBC reported on Tuesday.

"The hype around generative AI in 2023 has just been so immense, that we think it's overhyped, and there's lots of obstacles that need to get through to bring it to market," Ben Wood, the chief analyst at CCS Insight, told CNBC.

"Just the cost of deploying and sustaining generative AI is immense," said Wood. He added that while massive companies like Google and Meta can shoulder these costs, it would be too expensive for many organizations.

For context, AI relies on chips to run, and the firm's prediction comes amid concerns about a global chip shortage.

The importance of these chips has even ignited a global scramble for Nvidia's semiconductor chips among industry giants — ranging from Elon Musk to Chinese tech titans.

In response to the soaring demand, Nvidia, a trillion-dollar chipmaker, announced in August that it plans to triple the production of its $40,000 processor chips next year.

And AI company OpenAI is now exploring plans to make its own chips, Reuters reported on Friday, citing recent internal discussions at the company.

For context, Dylan Patel, the chief analyst at semiconductor research firm SemiAnalysis, estimated that the company burns through up to $700,000 a day on the computing power necessary to keep ChatGPT running.

CCS Insight did not immediately respond to a request for comment, sent outside regular business hours.