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AI Companies Receive 42% of US Venture Capital Investment | PYMNTS.com

Dec 16, 2024 - pymnts.com
Venture capital in the U.S. is increasingly focusing on artificial intelligence (AI) companies, with 42% of U.S. venture capital invested in AI in 2024, up from 36% in 2023 and 22% in 2022, according to HSBC Innovation Banking. The report highlights that 20 AI companies have each raised $2 billion or more, indicating a significant consolidation within the industry. This surge in investment is expected to usher in "The Agentic Age," where autonomous AI capabilities transform communication, work, and interactions with digital and physical environments. HSBC also noted that R&D spending by the "Magnificent 7" companies—Tesla, Nvidia, Microsoft, Meta, Apple, Amazon, and Alphabet—exceeded all U.S. startup investments in 2024.

Additionally, BlackRock anticipates 2025 to be pivotal for infrastructure and cybersecurity investments, driven by the AI boom. Jay Jacobs from BlackRock emphasized the need for AI firms to expand their data centers and secure their data. On the same day as the HSBC report, SoftBank announced a $100 billion investment in the U.S. over four years, focusing on AI and related infrastructure. HSBC expects the U.S. tech sector to experience growth due to changes in the acquisition market, deregulation, and fiscal policies that promote economic activity.

Key takeaways:

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  • U.S. venture capital investment in AI companies has reached unprecedented levels, with 42% of venture capital directed towards AI in 2024, up from 36% in 2023 and 22% in 2022.
  • As of 2024, 20 AI companies have each raised $2 billion or more, indicating significant consolidation within the AI sector.
  • Investment in AI is expected to drive major changes in infrastructure and cybersecurity, with firms needing to expand data centers and enhance data protection.
  • R&D spending by the "Magnificent 7" companies (Tesla, Nvidia, Microsoft, Meta, Apple, Amazon, and Alphabet) surpassed total U.S. startup investments in 2024, highlighting their dominant role in tech innovation.
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