In H1 2023, artificial intelligence dominated the tech space, with billions of dollars getting invested in the sector. An increasing number of businesses, especially in the tech space, are prioritizing the development of artificial intelligence (AI) over all other digital technologies. Tech giants like Google, Microsoft, and Meta are all betting on AI projects to drive revenue growth for their businesses.
Microsoft marked a significant move in the AI market in January 2023, when the firm made an investment of US$10 billion in OpenAI, the name behind ChatGPT. Through the investment in OpenAI, the firm is taking on Google in the search engine space, as it has integrated the ChatGPT technology into Bing. Further building on its AI investment, Microsoft invested an undisclosed amount in an India-based startup Builder.ai in May 2023. The two firms are expected to collaborate on the development of AI-powered tools, enabling Microsoft to compete with Google.
Following the footsteps of Microsoft, Google also made a bigger push in the AI space, when the firm infused US$300 million in OpenAI competitor Anthropic in February 2023. For years, Google has been at the forefront of the technological revolution, and the investment in Anthropic is part of the firm's strategy to maintain its technological prowess through strategic collaborations in the sector.
Meta, which increasingly invested in the development of virtual worlds, is now focusing more of its efforts in the AI segment. The investment in the metaverse has resulted in huge losses for the firms, resulting in increased scrutiny from investors and shareholders, who are demanding better strategic moves. In 2023, Meta is expected to significantly invest in AI to drive its revenue growth. The firm, in May 2023, announced a series of new technologies, including an in-house chip for training AI faster and a tool for developers that will enable them to build faster and more efficiently.
This strategic approach adopted by Microsoft, Google, and Meta is a clear indication that big tech players are foreseeing AI as the next growth driver for their businesses over the next five years. While these big tech firms are investing billions of dollars in the development of their AI technology, they have also continued to invest in innovative startups in the space in H1 2023.
Inflection AI, in partnership with CoreWeave and Nvidia, is working on the development of the largest AI cluster worldwide. The firm has also created large language models enabling people to interact with its chatbot called Pi. This means that the firm is competing with the likes of OpenAI and Google in the generative AI space.
Cohere, another OpenAI competitor, announced that the firm had raised US$270 million in a fundraising round in June 2023. The capital infusion was led by Nvidia, Oracle, and Salesforce Ventures. Being the premier AI chip maker, the investment in Inflection AI and Cohere is part of the firm’s strategy to further strengthen its position in the segment over the next three to four years.
Other AI-focused startups like Reka, Mistral AI, and Instawork have also raised multi-million dollars in investment from individual investors and venture capital and private equity firms in H1 2023.
The investment frenzy in the AI sector is expected to further continue in H2 2023. Tenstorrent, an AI-chip firm, announced that the firm had raised US$100 million in an investment round from Hyundai, Kia, and Samsung. Other investors like Fidelity Ventures, Eclipse Ventures, Maverick Capital, and Epiq Capital also participated in the investment round. The Canadian firm, which raised the funding in August 2023, is looking to compete with Nvidia.
Nomic, another AI startup based in the United States, raised US$17 million in a funding round led by Coatue in July 2023. The investment round has valued the firm at US$100 million and shows that venture capital firms have continued to bet on small teams with popular AI products. The firm, to date, has launched two products including an open-source AI model.
The trend is expected to further continue from the short to medium-term perspective in the global market, thereby supporting the accelerated growth trajectory of the artificial intelligence market over the next three to four years. Overall, TechInsight360 maintains a robust growth outlook for the AI market, with innovation and a competitive landscape projected to be the growth driver for the industry.
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