Investors are growing increasingly weary of AI | TechCrunch

🌈 Abstract

The article discusses the current state of the AI industry, which is facing a reckoning after years of easy money. It examines the decline in global investment in AI, both in private investment and corporate mergers and acquisitions, and explores the factors behind this trend.

🙋 Q&A

[01] Overview of AI Investment Trends

1. What are the key trends in AI investment in 2023 compared to previous years?

• Global investment in AI fell for the second year in a row in 2023
• AI-related mergers and acquisitions fell from $117.16 billion in 2022 to $80.61 billion in 2023, down 31.2%
• Private investment in AI dipped from $103.4 billion to $95.99 billion
• Total investment in AI dropped to $189.2 billion in 2023, a 20% decline compared to 2022
• However, the number of AI startups receiving funding increased by 40.6% in 2023 compared to 2022

2. What are some factors contributing to the decline in overall AI investment?

• The largest AI players (Anthropic, OpenAI, etc.) have staked out their ground, leading to a slowdown in billion-dollar investments
• Slower-than-expected growth in AI has led to a recognition of the technical and go-to-market challenges that need to be addressed
• Investors are taking a more deliberate and discerning approach, moving away from the initial exuberance and hype around AI
• There is less appetite to fund "a bunch of new players" in the AI space, as the capital required for AI applications and agents is lower than other parts of the stack

[02] Generative AI Investment Trends

1. How has investment in generative AI startups performed compared to the overall AI industry?

• Funding for generative AI startups reached $25.2 billion in 2023, nearly ninefold the investment in 2022 and about 30 times the amount from 2019
• Generative AI accounted for over a quarter of all AI-related investments in 2023

2. What are some concerns about the sustainability of the generative AI investment boom?

• There are doubts about whether generative AI can deliver the promised efficiency gains at scale and drive top-line growth through AI-integrated products and services
• Some high-profile VCs have steered clear of generative AI, and corporate customers seem increasingly skeptical of the technology's promises

3. How do experts view the current state of the AI investment landscape?

• The AI industry is undergoing a "necessary" correction to the "bubble-like investment fervor" of the past
• The investment pace is expected to stabilize and persist throughout 2024, with the overall trajectory for AI investment remaining robust and poised for sustained growth