The report indicates that 72% of decision-makers anticipate broader adoption of generative AI in the near term, reflecting a significant trend towards integration in various sectors.

The competitive landscape is shifting, as OpenAI's market share in enterprise AI has dropped from 50% to 34%, while Anthropic's share has doubled from 12% to 24%, indicating a growing preference for multiple foundation models.

Menlo Ventures has reported a staggering 500% increase in enterprise spending on generative AI, soaring from $2.3 billion in 2023 to $13.8 billion in 2024.

Investment in AI-native applications has also surged to $4.6 billion in 2024, nearly an eightfold increase from $600 million the previous year, as organizations implement multiple solutions across various departments.

This data comes from Menlo Ventures' second annual report titled 'State of Generative AI in the Enterprise', which surveyed 600 IT decision-makers from companies with at least 50 employees.

Menlo Ventures highlighted AI agents as a key investment trend for 2024, with major tech companies like Google, Microsoft, Amazon, OpenAI, and Anthropic developing these autonomous technologies.

AI agents are designed to perform complex, multistep tasks independently, enhancing productivity and potentially increasing revenue for businesses.

Tim Tully, another partner at Menlo Ventures, noted that with foundational infrastructure in place, companies are now focusing on innovative applications of AI, which are expected to transform industries and create new markets.

Enterprises are increasingly using an average of three different foundation models, with a strong preference for closed-source options, which account for 81% of usage.

Healthcare leads the way in sector spending on generative AI, with investments totaling $500 million, followed by legal services at $350 million, and both financial services and media/entertainment at $100 million each.

Joff Redfern from Menlo Ventures emphasized that 2024 marks a pivotal year for generative AI, as enterprises transition from experimentation to embedding AI into their core business strategies.

The adoption of retrieval-augmented generation (RAG) technology has risen significantly, from 31% to 51% year-over-year, with emerging vector database solutions gaining traction against traditional databases.