AI in 2024/2025: A Pragmatic Optimist’s View

As I reflect on 2024, it’s clear that AI is no longer a future promise – it’s a present and enduring reality. This year marked a turning point where AI became solidly embedded in the daily lives of many, and it’s only going to grow from here. For those who entered 2024 as AI skeptics, I like to think that this year challenged those views. If you’re more of a pragmatic optimist like me, it was energizing to see many of the advances that we anticipated play out. Here are some examples:

• AI models improved across the board. Whether it was large models like Open AI’s o1 or smaller, specialized ones, the year saw a tremendous number of advancements and releases. These models are not only more capable but also setting the stage for AI agents that can execute a series of tasks on our behalf. Take our Microsoft Phi models, for example—designed for efficiency and adaptability, they deliver performance comparable to state-of-the-art large models, all while operating at a fraction of the size of LLMs. This breakthrough opens up new possibilities for deploying powerful AI in resource-constrained environments, democratizing access to cutting-edge capabilities.
• A Cambrian explosion of innovation. We expected to see an incredible wave of AI-driven innovation this year with both startups and established companies, and it has materialized in full force. This is especially true in the startup landscape. A lot of companies are doing incredible work here – from AI infrastructure ( Neon , unstructured.io ), cybersecurity ( HiddenLayer ), and data governance ( Relyance AI ) to name a few.   
• Progress in emerging technologies. Categories we’ve tracked for years—like autonomous transport and drug discovery—made remarkable progress this year. I started 2024 riding through the streets of London in a Wayve autonomous vehicle, something I only dreamed about as a kid watching Knight Rider. Fast forward to last week, when my kids were thrilled to take a ride in an autonomous taxi in San Francisco—now a common sight in the city. It’s a vivid reminder of just how far we’ve come.
• Main Street companies embrace AI. One big shift in 2024 was how companies outside of the tech sector moved from experimenting with AI to scaling it across their organizations. These businesses are now integrating AI into operations, customer service, and decision-making in transformative ways. AI is becoming central to how these companies compete, innovate, and deliver value to their customers.

So what happens next?

The last two years have been unlike any I’ve experienced in my career, and 2025 will surely be another memorable year. My colleagues and I recently shared six trends to watch in 2025, where I noted that AI is already making the impossible feel possible. Here’s what I’m watching and excited to see play out:

• Agents. If 2024 was about generative AI, 2025 will be about the rise of agentic AI – or agents. Agents move beyond the ability to give you a good answer to a good question. They have the ability to perform a set of functions or execute a task on your behalf. From drafting reports to managing workflows, agents are poised to play a central role in how businesses approach everyday tasks. Ultimately, there will be many different agents at work in an organization, working in concert with one another to execute work on behalf of an individual.
• Embodied AI. This is about AI interacting in the physical world, use cases like autonomous transport and humanoid robots. Multimodal AI models capable of combining spatial and language intelligence will drive these innovations forward. Gen AI will lead to the introduction of new devices and wearables. As machines become more adept at interacting with the physical world, we’ll see advancements in fields like robotics for a wide variety of uses.
• AI diffusion. AI is steadily permeating every aspect of our lives—from how we work to how we learn, plan family trips, and even run companies. Its ability to assist in both personal and professional contexts will continue to expand, offering new ways to enhance our efficiency, creativity, and decision-making. We’ll continue to see this in 2025, likely in some ways we can’t yet imagine.  

As we step into 2025, I remain a pragmatic optimist. The challenges ahead are real, but so are the opportunities. AI is no longer just a tool—it’s becoming a trusted partner in helping us navigate an increasingly complex world.

So, I’ll leave you with this: How will you and/or your organization leverage AI in the year ahead to solve the toughest challenges and uncover new opportunities? Let’s make 2025 another year of progress and possibility.