<div id="readability-page-1">There's no question that artificial intelligence (AI) has real use cases and that the latest AI models can do some incredible things. But it's important to remember that the technology has limitations. Ultimately, all an AI model does is predict the next token -- characters of text, pixels in an image, and so forth -- in a stream of tokens. There's no real reasoning or thinking, just a bunch of statistics. Because of these limitations, AI models often get things wrong or create false information. It's not surprising, then, that businesses are struggling to make AI investments work. International Business Machines (IBM -1.32%) recently conducted a survey of 2,000 CEOs around the world, and the main takeaway paints a rough picture for companies like Nvidia (NVDA -0.62%) that are all-in on AI. <div><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MTc4NDcvZ2V0dHlpbWFnZXMtMTUxNTE2MTEwLmpwZyZ3PTcwMA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MTc4NDcvZ2V0dHlpbWFnZXMtMTUxNTE2MTEwLmpwZyZ3PTcwMA"/>Image source: Getty Images. </div> <h2>A lot of hope is driving AI investments</h2> According to IBM's survey, just 25% of CEOs said AI initiatives have delivered the expected return on investment (ROI) over the past few years. Worse, only 16% of CEOs report that AI initiatives have been scaled enterprise-wide. AI is still providing value to businesses, although perhaps not as much as originally expected. About 52% of CEOs claim their organization is realizing value from AI investments outside of cost reductions. Around two-thirds of CEOs noted that the risk of falling behind, rather than a clear view of the financial benefits, is driving AI investments right now. While AI technology is struggling to deliver for businesses, CEOs remain optimistic. A full 85% of CEOs expected AI to deliver a positive ROI by 2027. <h2>Why this is bad news for Nvidia</h2> Nvidia's growth story hinges on ever-growing demand for more powerful AI accelerators to train and run AI models of increasing complexity and cost. However, with businesses struggling to produce positive returns on investment from AI initiatives, the path to positive ROI almost certainly involves bringing down the cost of AI. That's not a trend that will benefit Nvidia. Nvidia needs to sell many millions of its data center graphics processing units (GPUs), and it needs to sell them for tens of thousands of dollars each to keep growing. While expanding usage of AI can drive demand for GPUs, the track record of businesses making AI investments work suggests that the future of the AI industry involves more efficient AI models capable of running on cheaper hardware. DeepSeek shook the AI industry earlier this year with its inexpensive AI models, and other developments are pointing in the same direction. Microsoft recently unveiled a new &#34;1-bit&#34; AI model that can run on a central processing unit (CPU) and uses just 0.4 gigabytes of memory while matching the performance of other AI models in the same size class. In the same vein, earlier this month, IBM previewed its Granite 4.0 Tiny AI model that can run on inexpensive consumer-grade GPUs. Cheap AI is good for the AI industry in the sense that it makes the technology more accessible and unlocks use cases that wouldn't work financially if the cost of running an AI model were prohibitive. Companies like IBM that are focused on enterprise AI solutions with clear ROIs benefit from the proliferation of affordable AI, while companies like Nvidia that need AI models to become more power hungry likely won't. While the AI industry is evolving quickly, Nvidia investors should be concerned about businesses' low rate of success in scaling their AI investments and making them work financially. </div>

NVDA

IBM's recent survey of 2,000 CEOs reveals that only 25% believe AI initiatives have met ROI expectations, with just 16% scaling these initiatives enterprise-wide. Despite optimism for future returns, the struggle to achieve positive ROI poses challenges for Nvidia, which relies on high demand for its GPUs. As businesses seek cost-effective AI solutions, the trend towards cheaper, efficient AI models may hinder Nvidia's growth, raising concerns for its investors about the viability of AI investments.

- The article discusses the limitations of artificial intelligence (AI) and highlights a recent IBM survey indicating that only 25% of CEOs report satisfactory returns on AI investments.  
- Despite the challenges, 85% of CEOs remain optimistic about achieving positive ROI by 2027, although the trend towards cheaper AI models may hinder companies like Nvidia that rely on high-cost hardware.  
- The emergence of affordable AI solutions could benefit firms focused on enterprise applications, while Nvidia faces potential difficulties due to businesses struggling to scale AI initiatives effectively.

IBM Just Gave Nvidia Stock Investors Terrible News