However, Gartner's "hype cycle" suggests that interest in new technology may wane if early implementations fail to deliver on their promise, potentially leading to a "trough of disillusionment". Despite this, legacy software companies are well-positioned to flourish due to their existing foothold in the market. As AI becomes more mainstream, these companies are likely to be better positioned to capitalize on it.
Key takeaways:
- Legacy software companies like SAP, Oracle, and IBM are experiencing soaring valuations, largely due to their transition from old-school license models to cloud-based models and their investments in AI technology.
- These companies are well-positioned to thrive with the rise of AI due to their established market presence, stable customer base, and significant resources for strategic acquisitions.
- Despite the hype around new AI companies, traditional software markets with a combined annual revenue of over $1 trillion in 2024 are still growing strongly.
- While there may be a potential "trough of disillusionment" for AI as per Gartner's "hype cycle", these legacy companies are better positioned to jump on mainstream AI adoption when it truly takes off.