2023 is turning out to be a gold rush year for Artificial Intelligence investments. Up to half of this year’s stock market gains are due to the buzz around disruptive technologies in AI, and AI unicorns are being churned out at a blistering pace.
This boom is rooted in some of the greatest technological advancements in decades (potentially depending on how room-temperature superconductors pan out). Notably, Artificial Intelligence (AI) has achieved a level of sophistication in generating text, code, images, and audio that is close to par with human abilities.
To make informed investment decisions around AI, it’s important to understand the landscape, including the technologies, the applications, and the industries AI is disrupting.
What’s behind the AI boom?
Venture investment in AI is exploding largely thanks to one technology called Transformers. First introduced in a 2017 research paper, Transformers have enabled the development of highly sophisticated natural language processing, like large language model technology tech-giant OpenAI, segwaying into GPT and BERT.
OpenAI’s ChatGPT has been the market leader for machine learning and natural language processing, becoming the fastest-growing application in history, reaching 100 million users just two months after launching. But, new tech companies like AI21 Labs, Anthropic, and Cohere are nipping at its heels with vast growth potential in natural language processing. For investors, backing companies that are displaying growth potential in AI algorithms can be a play toward owning a piece of the brainpower that drives many applications.
Shifting the focus to vision, convolutional neural networks (CNNs) and generative adversarial networks (GANs) are used for generating images, audio, and videos. Companies like RunwayML are advancing in this space, and investment in vision models can be seen as a bet on industries like healthcare, automotive, and retail, where visual data is paramount.
Hardware and chips: The shovels
In the booming AI industry, tech companies selling AI hardware can be compared to “selling shovels in a gold rush.” Nvidia is the behemoth in this space, but there’s a burgeoning scene of startups striving to build the next generation of AI chips.
Take Sapeon, for instance. This South Korean startup is making waves in the AI chip market by designing specialized AI semiconductors for data centers. With a recent funding round, Sapeon’s valuation has soared above $400 million, marking its growing presence in the AI hardware space.
Another big contender is GrAI Matter Labs, which claims to offer better performance than Nvidia. By focusing on optimizing performance, GrAI Matter Labs is positioning itself as an alternative for those seeking more processing power in their AI applications.
Data: The lifeblood
But algorithms and hardware are just part of the story. Data is the fuel that powers AI, and high-quality data is indispensable for training robust AI models, fine-tuning their performance, and ensuring their real-world applicability.
One startup that’s making strides in this domain is Scale AI. As of April 2021, the company has raised a total of $603 million over six funding rounds and was last valued at over $7 billion. Its growth underscores the burgeoning demand for high-quality data in AI applications.
Scale AI operates in a competitive market with players like SuperAnnotate, Dataloop, Fastagger, and V7, among others. As AI applications continue to proliferate, the demand for data is bound to surge, making data-providing companies an invaluable piece of the AI investment puzzle.
Applications and services: The implementation
Once you have the algorithms, hardware, and data, the next step is applications. Copywriting and marketing, in particular, have greatly benefited from AI. Copy.ai and Jasper.ai, for instance, have raised over $100 million to automatically generate compelling marketing copy and content for thousands of businesses.
Another area where AI is revolutionizing consumer applications is photo and video editing. Facetune, which recently raised $10 million, and Stability AI, which raised $100 million, are two examples. These applications let users generate AI selfies and more for pennies that artists used to charge hundreds of dollars for.
While consumer applications offer impressive prospects, it’s important for retail investors not to have tunnel vision when making investment decisions. AI is also making groundbreaking advancements in industries such as healthcare, finance, and manufacturing- providing AI exposure to a diversified portfolio of companies for savvy investors. For example, AI-powered diagnostic tools are improving patient care, while AI algorithms are being used to predict stock market trends with surprising accuracy.
Given that AI innovation is happening in these relatively small upstarts, gaining access to private market investment opportunities is essential. Gridline offers a gateway for accredited investors to access private markets, enabling them to participate in early-stage investments that have the potential to yield significant returns.