Gartner forecasts major consolidation in agentic AI market ahead

Gartner has reported that the current supply of agentic artificial intelligence (AI) models, platforms and products is far outstripping market demand, which it believes will result in market correction and consolidation within the sector.

According to analysts at the business and technology insights firm, the rapid proliferation of agentic AI providers-including those offering AI models, agentic-integrated platforms and agent-infused products-has led to an oversupply that cannot be matched by present demand.

This situation, according to Gartner, mirrors phases seen in other industries such as energy, telecommunications, and early Internet businesses, with rapid development followed by a period of adjustment as the market aligns to sustainable business models that integrate transformational technologies.

Supply and demand imbalance

Will Sommer, Senior Director Analyst at Gartner, addressed this imbalance and its implications for both vendors and customers.

"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," 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's analysis indicates that many product leaders are entering a period of transition as the market shifts from initial hype and fear of missing out (FOMO) toward a more fundamentals-driven phase. The company anticipates that undifferentiated AI businesses and their financial backers will lose ground, while larger, capital-rich incumbents will be positioned to acquire promising technology and talent emerging from smaller firms.

The research outlines a significant ongoing market correction, but Gartner analysts were clear to distinguish this adjustment from speculative financial disasters in other industries.

"The impending agentic AI market correction is distinct from speculative bubbles fueled by systemic financial engineering, fraud or policy," Sommer said. "At this point, the underlying product, agentic AI, is sound, and the current market correction, where markets rationalise and consolidate, is a regular part of the product life cycle.

"However, a 'speculative bubble' could still form if investment becomes detached from agentic AI's intrinsic potential to deliver tangible and commensurate economic value."

Consolidation among providers

The research notes that larger technology firms have already begun acquiring smaller, specialised AI firms, marking the initial stages of the correction. Gartner believes that this process of consolidation will bring benefits such as improved scale and vertical integration to the sector.

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

The benefits of such consolidation, according to Gartner, include more reliable AI products tailored to particular business objectives, as well as enhanced value and performance from models developed for specific business domains.

Evolving adoption and future outlook

Gartner's projections suggest that, following this transitional phase, the market will see the emergence of established incumbents in the agentic AI space, which will then facilitate wider and more sustainable long-term adoption of agentic products.

Shifts in consumer habits, evolving skills, and business processes are also anticipated to support mainstream adoption. As these developments unfold, the agentic AI sector is expected to move beyond the early "adoption" stage and begin delivering productivity and profit driven by measurable business outcomes.

Gartner has highlighted that further details on the subject are outlined in its research report "Tech FutureSight: An AI Market Correction Is Imminent; It Won't Be the Last."