Chatter is picking back up about this week The hype of creative artificial intelligence doomed to die.
New reports from The New York Times And The Wall Street Journal Note that many AI startups, which have received tons of cash from venture capital firms over the past few years, have yet to find viable business models.
The journal suggests that investors are wrong to assume that every startup will be like OpenAI (ie, massively successful). It points to startups like Imbue, Character AI, and Magic AI, which make little or no money:
Venture capitalists are betting that some of these startups will be the pioneers of a tech revolution that could outlast the birth of the Internet. They point to the meteoric rise of OpenAI, whose chatbot ChatGPT became the fastest-growing consumer app in Internet history. OpenAI went from zero to more than $1 billion in revenue last year, a rapid growth rate even by Silicon Valley’s most alarming standards.
So far, few other startups with similar big ambitions have been able to replicate this success.
The Times says the problem for such startups isn’t just the gap between their costs and revenue, but the fact that they have to compete with big tech behemoths:
The AI revolution, it is becoming clear in Silicon Valley, is going to come with a huge price tag. And the tech companies that have bet their futures on it are scrambling to figure out how to bridge the gap between those costs and the profits they hope to make somewhere down the line. Hope to earn.
The problem is particularly acute for a group of high-profile startups that have raised tens of thousands. Billions of dollars For the development of generative AI, the technology behind chatbots such as ChatGPT. Some of them are already realizing that it will take billions of dollars to compete with giants like Google, Microsoft and Meta – and it won’t be enough.
We have written here. This moment of AI hype will, indeed, pass — eventually. It will take a lot of time to develop and implement. Generative AI technologies In the fabric of our daily lives, which some investors believe will create a sense of frustration. But this is mostly the case with new technologies (see Metaverse and Autonomous Vehicles). And the analysts we spoke to last month. Don’t think an AI bubble is going to burst like the dot-com era of the 1990s:
Like all new technology, AI can be in the “hype” phase. But that doesn’t mean all AI-related companies are overvalued. [D.A. Davidson analyst Gil Luria] said.
…Even among experts who see an AI bubble forming, many say it won’t be as bad as the dot-com burst. Richard Windsor, founder of research firm Radio Free Mobile, said people are using “elaborate and untested methods” to justify exorbitant prices. [AI] Companies, as they did in the dot-com era.
But, he said, “the Internet bubble is bursting. [was] AI will be worse than the bursting of the bubble”. This is partly because even in its “immature form” today, AI has the potential to generate significantly more revenue than the Internet did in the 1990s and early 2000s. The Internet was “very slow” in the 2000s, he said, “and took a long time to realize its full potential.” Meanwhile, Windsor said he sees the full potential of AI as ultimately limited As the AI bubble bursts, “what the Internet becomes will be bigger than what AI will be in its current form,” Windsor said.
Read our full story on why the AI craze isn’t a dot-com bubble..
Credit : qz.com