The current supply of agentic AI models, platforms and products is far surpassing demand, and this will result in consolidation and a market correction, predicts analysts Gartner.
The AI race now features a crowded field of tech vendors, spanning long-established players and AI-native newcomers. Gartner expects agentic AI markets will consolidate in the short term as hype and fear of missing out (FOMO) give way to fundamental economics.
While the tech vendors are all in a race to produce AI products, speed will not be the only variable for success. Gartner believes that the winners will be capital-rich incumbents with the resources to acquire promising technologies and talent. The losers will be undifferentiated AI companies and their investors
“While we see early signs of market correction and consolidation, product leaders should recognise this as a regular part of the product life cycle, not a sign of economic crisis,” said Will Somner, 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.” Similar to other corrections in energy, telecommunications, and the dot-coms, Gartner said product leaders should view the current state of agentic AI as a transition period in which business models are forced to calibrate to transformational technologies.
Why agentic AI remains sound
“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 rationalise 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,” he added.
According to Gartner, agentic AI activities will range from supporting everyday AI work by improving interactions with customers, suppliers and employees, to redesigning the remits and interactions of knowledge workers with new processes and data flows.
Large tech companies have already been acquiring smaller, specialised AI firms, signalling 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 specialised applications, represent an example of innovation.”
These evolutions, paired with changing consumer habits, skills and processes, added Gartner, will facilitate the mass adoption of agentic products.
