Gartner has released a report indicating that the supply of agentic AI models, platforms, and products currently exceeds demand, suggesting a potential consolidation and market correction.

The research firm anticipates that the agentic AI market will consolidate in the short term as the initial hype and fear of missing out gives way to fundamental economic principles.

According to Gartner, the expected losers in this consolidation will be 'undifferentiated AI companies' and their investors. In contrast, capital-rich incumbents with the resources to acquire promising technologies and talent are expected to emerge as the winners.

Will Sommer, Gartner's Senior Director Analyst commented, "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 inevitable economic crisis."

The report highlights that the mass proliferation of AI providers launching agentic models and platforms has surpassed current demand. Gartner compares the current situation to past corrections in sectors such as energy, telecommunications, and the dot-com industry, viewing it as a transition period for business models to adapt to transformational technologies.

Large technology companies have already begun acquiring smaller, specialized AI firms, which Gartner views as a signal of the market correction phase's onset.

The consolidation is expected to bring benefits of scale and vertical integration, resulting in more reliable products targeted at specific business outcomes. Sommer elaborated, "Large providers will establish expansive, integrated ecosystems that significantly improve agentic performance, leading to more reliable products targeted at specific business outcomes."

Domain-specific language models are highlighted in the report as an innovation providing superior value and performance in specialized applications. Gartner anticipates that the remaining AI providers, or newly emerged incumbents, will achieve sustainable growth. The agentic AI market is expected to eventually surpass adoption phase expectations based on tangible metrics of productivity and profit.

For those seeking more insights, Gartner offers a report titled 'Tech FutureSight: An AI Market Correction Is Imminent; It Won't Be the Last.' Additionally, Gartner provides a tool called AI Use Case Insights to assist technology and business leaders in discovering, evaluating, and prioritizing AI use cases.