Quick Take
Google CEO Sundar Pichai has finally said the quiet part out loud: the AI market is exhibiting "elements of irrationality", and when the correction comes, "no company will be immune." If the company selling you the pickaxes is worried about the gold mine running dry, it’s time to put them down and stop the shovel-ware spending. Now is the time for IT leaders to abandon "build it and they will come" justifications and simply say "show me the money."
How Did We Get Here?
Everyone rode the rocket ship of ChatGPT from late 2022 into a stratosphere of spending. IT executives, terrified of being left behind, poured an estimated $1 trillion into AI infrastructure and pilots over the last two years. They moved from Generative AI to Agentic AI with dizzying speed, often skipping the boring-but-vital data governance step. Now, as we hit late 2025, the bill has arrived. Energy consumption is wrecking ESG goals, and reports indicate that while adoption is high, actual ROI is as elusive as a hallucination-free LLM.
How Much Should You Care?
Our analysis using the Tactive Action Index, Figure 1, indicates that you should care deeply about the risk, not the hype of heavy additional AI investment. The score of 1.8 signals that you should pause new large-scale CapEx and audit existing pilots. We base this on three developments. First, ROI is missing in action. Only 5% of generative AI initiatives are producing measurable financial returns, despite significant investment. Second, "Pilot Purgatory" is the new normal. The transition from pilots to scaled impact remains a major bottleneck; nearly two-thirds of organizations have not yet begun scaling AI across the enterprise. We have officially moved from "fear of missing out" to "fear of getting stuck." Third, infrastructure costs are unsustainable. Companies are spending heavily on "AI Agents" and tokens while ignoring that corporate data isn't "AI-ready." The barrier to entry for data readiness remains high due to skill shortages and data messiness.
Fig. 1 AI Heavy Spend Action Index
Key Takeaway
Stop treating your AI spend like a magic wand that would miraculously solve all your operational efficiency woes. Instead, start treating it like a very expensive, high-maintenance employee that needs a performance review immediately.