1. Agentic AI supply exceeds demand, prompting market correction. 2. Consolidation will favor capital-rich companies acquiring talents. 3. Market correction is a natural product life cycle phase. 4. Large providers will integrate ecosystems for better AI performance. 5. Adoption of agentic AI will surpass expectations with product metrics.
Long-term confidence in agentic AI despite short-term market correction. Historically, similar corrections in tech led to stronger long-term growth.
The analysis indicates a strong potential for long-term growth in AI despite current oversupply, which is crucial for IT investments.
Market corrections often lead to industry consolidation, benefiting few robust players. This trend typically strengthens market positioning over time.
Despite a Market Correction, Long-Term Investment in Agentic AI Will Continue
The current supply of agentic AI models, platforms and products far exceeds demand, which will result in consolidation and market correction, according to Gartner, Inc., a business and technology insights company.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20251007066384/en/
Figure 1: AI Adoption Gap
Gartner analysts anticipate that agentic AI markets will consolidate in the short term as hype and fear of missing out (FOMO) give way to fundamental economics. In this AI Vendor Race, the losers of consolidation will be undifferentiated AI companies and their investors. The winners will be capital-rich incumbents with the resources to acquire promising technologies and talent.
"While we see early signs of market correction and consolidation, product leaders should recognize this as a regular part of the product life cycle, not a sign of inevitable economic crisis," said Will Sommer, Senior Director Analyst at Gartner. "Over the longer term, consolidation will enable industry leaders to develop agentic products that meet the technical and business requirements of customers who are presently struggling to adopt AI agents."
The mass proliferation of AI providers launching agentic models, agentic-integrated platforms and other agent-infused products far exceeds the present demand (see Figure 1).
Similar to other corrections in energy, telecommunications, and the dot-coms, product leaders should view this stage of the agentic AI market as a transition period in which business models are forced to calibrate to transformational technologies.
"The impending agentic AI market correction is distinct from speculative bubbles fueled by systemic financial engineering, fraud or policy," Sommer said. "At this point, the underlying product, agentic AI, is sound, and the current market correction, where markets rationalize and consolidate, is a regular part of the product life cycle.
"However, a ‘speculative bubble' could still form if investment becomes detached from agentic AI's intrinsic potential to deliver tangible and commensurate economic value."
Large tech companies have already been acquiring smaller, specialized AI firms, signaling the start of the market correction phase. With this consolidation will come benefits of scale and vertical integration.
"Large providers will establish expansive, integrated ecosystems that significantly improve agentic performance, leading to more reliable products targeted at specific business outcomes," said Sommer. "Domain-specific language models, which provide superior value and performance in specialized applications, represent one such innovation."
These evolutions, paired with changing consumer habits, skills and processes, will facilitate the mass adoption of agentic products. The remaining providers — the newly emerged AI incumbents — will attain sustainable growth and eventually the agentic AI market will surpass "adoption" phase expectations based on tangible metrics of productivity and profit.
Gartner clients can read more in the report Tech FutureSight: An AI Market Correction Is Imminent; It Won't Be the Last.
Learn how to build actionable strategies to align your business, empower your teams, and boost revenue in the age of agentic AI in the complimentary Gartner insights 5 Steps to Seize Agentic AI Opportunity.
About Gartner AI Use Case Insights
Gartner AI Use Case Insights is an interactive tool that helps technology and business leaders efficiently discover, evaluate, and prioritize AI use cases to potentially pursue. Clients can search over 500 use cases (applications of AI in specific industries) and over 380 case studies (real world examples) based on industry, business function, and Gartner's assessment of potential business value. Clients can access the interactive tool at https://tools.gartner.com/use-case-insights.
Gartner IT Symposium/Xpo
At Gartner IT Symposium/Xpo, CIOs and IT executives will learn how to become agents of change in their organizations and harness AI for successful digital transformation. Follow news and updates from the conferences on X and LinkedIn using #GartnerSYM, and on the Gartner Newsroom.
About Gartner for High Tech Leaders and Providers
Gartner for High Tech Leaders and Providers equips tech leaders and their teams with role-based best practices, industry insights and strategic views into emerging trends and market changes to achieve their mission-critical priorities and build the successful organizations of tomorrow. Additional information is available at www.gartner.com/en/industries/high-tech.
Follow news and updates from Gartner for High Tech on X and LinkedIn using #GartnerHT. Visit the Gartner Newsroom for more information and insights.
About Gartner
Gartner, Inc. (NYSE:IT) delivers actionable, objective business and technology insights that drive smarter decisions and stronger performance on an organization's mission-critical priorities. To learn more, visit gartner.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20251007066384/en/
Matt LoDolce
Gartner
matt.lodolce@gartner.com
Meghan Moran
Gartner
meghan.moran@gartner.com