A large percentage of AI projects are abandoned before reaching full deployment, with failure rates consistently reported between 42% and 95% depending on the context and definition. The most reliable recent figures suggest that 42% of companies scrapped most of their AI initiatives in 2025, while on average, 46% of AI proof-of-concepts are abandoned before reaching production. For generative AI projects, failure rates may be even higher, sometimes reported at 95%.
Key AI Project Abandonment Statistics
General AI Projects: 42% of companies abandoned most AI initiatives in 2025—up from 17% in 2024.
Proof of Concepts: 46% of AI proof-of-concepts (POCs) are typically abandoned before production.
Enterprise Scale: 70–90% of enterprise AI initiatives fail to scale into recurring operations.
Generative AI: Up to 95% of business attempts to integrate generative AI reportedly fail.
Is AI in a bubble?
Many experts, data, and market leaders believe the current state of artificial intelligence resembles a classic investment bubble, although there is debate about whether it will crash or evolve into lasting transformation. Extreme valuations, massive venture capital inflows, hype-driven investment behavior, and a high rate of abandoned projects all display warning signs reminiscent of the dot-com bubble era.
Evidence AI Is in a Bubble
Major economists and tech CEOs (including Sam Altman of OpenAI) openly say the sector is exhibiting bubble-like traits: funding surpassing fundamentals, valuations detached from business results, and FOMO driving reckless investment.
MIT studies show 95% of generative AI business integrations fail, with only a handful of projects delivering meaningful ROI.
Hundreds of AI startups achieve “unicorn” status ($1 billion+) despite having no mature products or profits.
AI company stock prices now trade at higher price-to-earnings ratios than during the dot-com bubble, said to be “even more unrealistic” than in 2000.
Investors poured record-breaking sums into AI startups in 2025, often for companies with limited operational history.
The evidence strongly supports labeling the AI sector as a bubble in 2025, with many similarities to previous tech bubbles—though the ultimate impact will depend on how the industry adapts and matures.