It's safe to say there's a lot riding on "artificial intelligence," a buzzy and nebulous swath of the tech industry pedaling all kinds of large language model (LLM) and similar software products.

Since ChatGPT emerged in November 2022, venture capitalist investments in AI have skyrocketed, rising to $131.5 billion in 2024, an increase of 52 percent compared to 2023. In the last three months of 2024, over half of all venture capital in the world went to AI companies.

One of the flashier bits of tech attracting investors are "AI agents," which are software product designed to complete multi-part tasks on behalf of their human taskmasters. Tech companies and big corporations have spilled tankers of ink hyping up these agents, insisting they will "replace knowledge work" and bring about a "fundamental shift in how businesses operate."

But despite these lofty promises and the money behind them, there's mounting evidence that AI agents are just the latest bit of empty tech industry promises.

In May, researchers at Carnegie Mellon University released a paper showing that even the best-performing AI agent, Google's Gemini 2.5 Pro, failed to complete real-world office tasks 70 percent of the time. Factoring in partially completed tasks — which included work like responding to colleagues, web browsing, and coding — only brought Gemini's failure rate down to 61.7 percent.

And the vast majority of its competing agents did substantially worse.

OpenAI's GPT-4o, for example, had a failure rate of 91.4 percent, while Meta's Llama-3.1-405b had a failure rate of 92.6 percent. Amazon's Nova-Pro-v1 failed a ludicrous 98.3 percent of its office tasks.

Meanwhile, a recent report by Gartner, a tech consultant firm, predicts that over 40 percent of AI agent projects initiated by businesses will be cancelled by 2027 thanks to out-of-control costs, vague business value, and unpredictable security risks.

"Most agentic AI projects right now are early stage experiments or proof of concepts that are mostly driven by hype and are often misapplied," said Anushree Verma, a senior director analyst at Gartner.

The report notes an epidemic of "agent washing," where existing products are rebranded as AI agents to cash in on the current tech hype. Examples include Apple's "Intelligence" feature on the iPhone 16, which it currently faces a class action lawsuit over, and investment firm Delphia's fake "AI financial analyst," for which it faced a $225,000 fine.

Out of thousands of AI agents said to be deployed in businesses throughout the globe, Gartner estimated that "only about 130" are real.

While tech hype isn't necessarily new, the mainstream frenzy and mountains of money behind AI certainly are. Recall Web3 — the blockchain-driven internet — which was basically a front for companies to commit unregulated securities fraud, and individuals to pull off crypto scams.

For much of their life cycle, Web3 startups brought in around $1 to 2 billion per quarter, topping out at $8 billion at the peak of the hype-coaster, according to Forbes. Compare that to AI hype, where just one company can raise $10 billion in a single fundraising round, and it's easy to see how far we've waded into the deep end.

Indeed, the AI hype has been swallowed uncritically by Wall Street, the mainstream media, and even the president — a mash of global fanfare that Web3 hucksters could only dream of. And unlike Web3, experts warn that the US economy is essentially fused to the fate of AI, with any downturn in hype potentially unleashing long-lasting consequences on the world.

More on AI agents: AI Hype Will Plunge America Into Financial Ruin, Economist Warns


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