– Global investment in AI fell for the second year in a row in 2023, with both private and corporate investment on the downswing.
– Some AI ventures continue to attract substantial investments, but overall investment in AI dropped by 20% compared to 2022.
– Generative AI remains a bright spot with funding reaching $25.2 billion in 2023 and accounting for over a quarter of all AI-related investments, despite skepticism from corporations.
In 2023, global investment in AI fell for the second consecutive year, with both private investment in startups and corporate investment in mergers and acquisitions on the decline. Total investment in AI dropped by 20% compared to 2022, but some ventures, like Anthropic and Inflection AI, continue to attract significant funding.
Analysts believe that the slowdown in AI investment reflects the challenges inherent in the technology, which will take time to address. The market is now more influenced by tech companies utilizing existing AI products to develop new offerings. Investors are becoming more discerning, evaluating AI investments more carefully as the industry matures.
Despite the overall decline in AI investment, generative AI, which creates new content like text and images, remains a bright spot. Funding for generative AI startups reached $25.2 billion in 2023, nearly nine times the investment in 2022. However, skepticism from corporations and concerns about productivity gains and data compromises have led some VCs to avoid investing in generative AI.
Many see the current correction in AI investment as necessary to correct excessive enthusiasm and ensure a more sustainable pace for the industry. Overall, the trajectory for AI investment is expected to remain robust and continue to grow, albeit at a more stable and normalized pace. The industry may be experiencing a necessary shift, reflecting a more mature and discerning investment landscape going forward.