In recent months, investors have become increasingly enamored with generative artificial intelligence models such as ChatGPT, which has captured the imagination of the tech industry and the general public alike since its launch in November. Despite a slump in the wider tech market, companies continue to unveil new foundation models every week, from Facebook’s llama to Elon Musk’s proposed “less woke” AI.
While ChatGPT has over 100 million users, entrepreneurs like Ben Tossell suggest that the real action in generative AI lies in less chatty services enabled by foundation models. These models are trained on massive amounts of data, allowing them to interpret natural language and respond with text, art, or music. They have been around for some time, but it took a consumer-facing service like ChatGPT to truly capture investors’ imaginations.
Investors are pouring money into the generative AI market, with more than 500 startups collectively raising over $11 billion to date, not including OpenAI, the startup behind ChatGPT. Microsoft recently invested $10 billion in OpenAI on top of an earlier $1 billion investment, and many venture capital firms see generative AI as the next big thing.
However, there is still some uncertainty as to which generative AI platforms will ultimately succeed. Many startups offer “me-too” ideas, and proprietary foundation models like OpenAI’s GPT-3.5 could become low-margin commodities as open-source alternatives catch up.
Generative AI is also facing some legal challenges, as the models often make mistakes and can go off the rails. Microsoft’s Sydney (first name) chatbot insulted some users and professed its love to at least one, leading to questions about legal liability for AI platforms. Copyright holders of web-based content on which existing models are trained without permission or compensation are also up in arms, leading to lawsuits against AI art-generators like Stable Diffusion.
Despite these challenges, investors are still hungry for generative AI, and the providers of processing power needed to train and run foundation models are benefiting. Nvidia’s share price, for example, is up by 60% this year thanks to its design of chips useful for AI applications. Cloud-computing services and data-center landlords are also rubbing their hands in anticipation of increased demand.
While the future of generative AI remains uncertain, it’s clear that investors are betting big on its potential. Whether it’s ChatGPT or another platform that ultimately comes out on top, the race is on to find the next big thing in AI.