Gartner Warns of Agentic AI Oversupply; Market Correction Expected

The supply of agentic AI models, platforms, and products now exceeds demand, signaling an impending market correction, according to a new market analysis by Gartner.

Earlier this year, Gartner said more than 40% of agentic AI projects will be scrapped by the end of 2027 due to rising costs, vague business value, and insufficient risk management.

Analysts expect short-term consolidation as hype and FOMO give way to market fundamentals, with undifferentiated AI companies likely to be the first casualties. Capital-rich incumbents, on the other hand, are positioned to acquire promising technologies and talent.

“While we see early signs of market correction and consolidation, product leaders should recognize this as a regular part of the product life cycle, not a sign of inevitable economic crisis,” said Will Sommer, Senior Director Analyst at Gartner. “Over the longer term, consolidation will enable industry leaders to develop agentic products that meet the technical and business requirements of customers who are presently struggling to adopt AI agents.”

Gartner noted that the proliferation of agentic AI providers far outpaces current market demand. The firm compared this phase to previous corrections in energy, telecom, and dot-com markets, emphasizing that the underlying technology is sound.

“The impending agentic AI market correction is distinct from speculative bubbles fueled by systemic financial engineering, fraud or policy,” Sommer added. “However, a ‘speculative bubble’ could still form if investment becomes detached from agentic AI’s intrinsic potential to deliver tangible and commensurate economic value.”

Large tech firms have already started acquiring smaller specialised AI startups, marking the beginning of the consolidation phase.

“Large providers will establish expansive, integrated ecosystems that significantly improve agentic performance, leading to more reliable products targeted at specific business outcomes,” Sommer said. “Domain-specific language models, which provide superior value and performance in specialized applications, represent one such innovation.”

As these shifts unfold, Gartner expects agentic AI to eventually surpass current adoption expectations, driving sustainable growth and delivering measurable productivity and profit for businesses that leverage these advanced autonomous AI systems.