2024 was the year artificial intelligence (AI) dominated the media, the stock market, and consumers' daily lives. A search for "artificial intelligence" in Aftenposten yields 1,189 results. Generative AI, such as OpenAI’s ChatGPT, experienced the fastest adoption rate ever. The value of AI companies like Nvidia, Meta, and Alphabet soared.

Consumers have integrated AI into everything from information searches to personalized recommendations—both privately and professionally. In the U.S., 40% of consumers adopted AI since its launch in November 2022. By comparison, the internet took five years to reach the same adoption rate. Globally, ChatGPT boasts over 100 million active users weekly.

Yet amidst all this, there is silence from macroeconomics. Despite technological breakthroughs and massive adoption, AI has yet to deliver the growth McKinsey predicted ($4.4 trillion) or the productivity gains Goldman Sachs forecasted (+1.5%). According to The Economist (November 20, 2024), the economic benefits remain in the future.

How can a technology that profoundly impacts society, markets, and consumers still fail to generate noticeable productivity improvements for ordinary companies? Should leaders focus on AI innovations that drive demand and willingness to pay rather than cost-cutting? In other words, prioritize increasing output over reducing input. If so, how?

Here are ten AI predictions that could unlock AI's economic potential in 2025:

1. Hyper-personalization: AI will enable tailored experiences, boosting customer satisfaction and loyalty through products and services that meet individual needs. This could significantly increase company revenues, as personalization can drive sales up by 20% (McKinsey, 2021).
2. AI-powered customer service: Advanced chatbots and virtual assistants will provide efficient support, allowing human agents to handle complex issues. Faster response times could reduce customer service costs by 30% (Accenture, 2022).
3. AI-based product development: By analyzing market trends and customer feedback, AI can identify innovation opportunities and develop better-suited products, cutting development time by 50% (Boston Consulting Group, 2023).
4. Ethical AI and data privacy: Companies must practice transparency and ensure data protection, gaining a competitive advantage and building trust. Ethical AI can reduce the risk of data breaches, which in 2023 cost companies an average of $4.45 million per incident (IBM Security, 2023).
5. Enhanced customer experience: AI will provide deeper insights into customer behavior, enabling proactive, personalized interactions that enhance satisfaction. Improved customer experience can increase loyalty by up to 80% (Salesforce, 2023).
6. Advanced AI agents: AI's task execution capabilities will improve, enabling more intuitive and efficient interactions with technology. This efficiency could save companies millions in operational costs, particularly in logistics and customer service (Gartner, 2022).
7. Next-generation AI hardware: Companies like Nvidia will drive the development of more powerful AI devices, enhancing user experiences. This will accelerate the growth of real-time applications, a market expected to expand by 45% by 2025 (IDC, 2023).
8. AI in smart home technology: Intelligent devices will integrate seamlessly, offering a more intuitive technological experience. The smart home market is projected to reach $200 billion by 2025 (Statista, 2023).
9. AI in weather forecasting: More accurate predictions will enable better planning and protection against weather-related events, saving global economies billions annually by mitigating the impacts of extreme weather (World Bank, 2022). 
10. AI in personal health: AI-driven health monitoring will provide more precise recommendations for maintaining health and biological age, reducing the prevalence of chronic diseases that cost the global economy over $47 trillion annually (World Economic Forum, 2023).

For companies to succeed, they must leverage AI to create value through increased demand, not just cost reductions. It is innovation that drives willingness to pay, not efficiency alone.

Tor W. Andreassen is a professor of innovation at the Norwegian School of Economics and affiliated with the DIG Center.

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