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The rapid proliferation of agentic AI systems has led to a significant oversupply that far exceeds current market demand, according to a new report from Gartner.
The research and advisory firm predicts an imminent market correction, characterised by consolidation, as the industry shifts from hype-driven growth to economic reality.
Gartner analysts anticipate that the agentic AI market — defined as models, platforms, and products capable of autonomous decision-making and task execution — will undergo consolidation in the near term, as early excitement and fear of missing out (FOMO) give way to fundamental market dynamics.
Will Sommer, Senior Director Analyst at Gartner, emphasized that while this correction may resemble past market downturns in sectors like energy, telecommunications, and dot-coms, it is a natural phase in the product life cycle rather than a sign of systemic failure.
“Product leaders should recognize this as a regular part of the product life cycle, not a sign of inevitable economic crisis,” Sommer stated. “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.”
Winners and Losers in the Vendor Race
The current landscape is crowded with AI providers launching agentic models and integrated platforms, but demand has not kept pace. Gartner warns that undifferentiated AI companies and their investors are likely to be the biggest losers in the coming consolidation.
In contrast, capital-rich incumbents—such as major tech firms—are positioned to thrive by acquiring promising technologies and talent, leveraging their resources to dominate the market.
Sommer noted that the correction is distinct from speculative bubbles driven by financial engineering or fraud. “At this point, the underlying product, agentic AI, is sound,” he said. “The current market correction, where markets rationalize and consolidate, is a regular part of the product life cycle.”
However, he cautioned that a speculative bubble could still emerge if investment detaches from the technology’s ability to deliver tangible economic value.
The Path to Mass Adoption
As the market consolidates, Gartner expects large providers to build expansive, integrated ecosystems that enhance agentic AI performance, leading to more reliable and specialized products. Domain-specific language models, which offer superior value in niche applications, are cited as a key innovation driving this shift.
The firm also highlights that evolving consumer habits, skills, and processes will play a critical role in accelerating the adoption of agentic AI. Once the market stabilizes, the remaining providers — newly established AI incumbents — are expected to achieve sustainable growth, with adoption metrics tied to productivity and profitability.