Amazon plans to invest $100 billion in artificial intelligence in 2025. CEO Andy Jassy calls AI "the biggest technological revolution since the internet." But not all investors share his optimism. Following recent earnings reports, shares of Amazon, Alphabet, and Microsoft dropped 4–7%. Only Meta showed a 7% gain.

Still, other tech giants are not sitting still. Google, Meta, and Microsoft are collectively expected to pour $320 billion into AI infrastructure in 2025 — covering data centers, chips, and software tools. But despite the wave of investment, many experts warn: don’t jump on the AI bandwagon just because it’s trending. First, take a hard look at your business and answer five essential questions.

These five questions were developed by a business strategy professor at Babson College, who asked his students to evaluate the social and economic impact of three technologies at the early stages of their adoption: the internet (1998), blockchain (2011), and generative AI (2023). The internet and AI ranked highest. Blockchain lagged behind due to high costs and limited practical payoff.

Here are the five questions every business leader should ask before investing in generative AI:

1. Does the technology solve a real customer problem?

During the pandemic, the internet helped retailers, restaurants, and service providers stay operational. Generative AI, so far, addresses less critical pain points — like automating repetitive tasks or helping with creative blocks. If your customers would experience a clear benefit or relief thanks to your AI-powered product, that's a green light.

2. Will customers pay enough for the technology to make it a sustainable business?

Most generative AI platforms are not yet profitable. Exceptions include Nvidia, with a staggering 55% net profit margin, and AWS, which generates half of Amazon’s profit. Others rely on ad revenue or offer services for free. If your AI solution can drive direct revenue, you may have a viable business model.

3. Does the technology deliver a quantum leap in value — for example, 10x more benefits per dollar?

When Amazon entered online retail, it offered broader selection, lower prices, and real customer reviews — a huge value shift. Generative AI can already summarize lengthy documents in seconds. If your solution can deliver that level of impact, it’s worth serious consideration.

4. Will ignoring the technology threaten your existing business model?

In the early 2000s, many newspapers and magazines observed the rise of the internet but failed to act — and were left behind. Are you making the same mistake with AI?

5. Can your company build the necessary capabilities fast enough to seize the opportunity?

In the internet era, traditional companies needed years to figure out e-commerce. Today, businesses are still exploring whether AI tools like chatbots can truly enhance operations. Ask yourself: is your team ready to adapt?

Bottom Line: Is AI Right for Your Business?

Goldman Sachs and McKinsey project that AI will drive economic growth, improve productivity, and displace some jobs. But so far, there’s no “killer app” — no AI version of the iTunes Store — that has transformed markets.

Until that moment arrives, it’s wise to approach with caution. As Amazon moves forward with its $100 billion AI push, Jassy remains confident: “Virtually every application we know today will be reinvented with AI. It’s probably the biggest technology shift since the internet.”

But unless your answers to all five questions are a solid “Yes,” experts advise staying strategic — not reactive. Because chasing the hype without a clear plan could be a costly mistake.

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Source: Ink