The cost of building AI systems has surprised industry veterans, with the cutting-edge chips required being expensive and in short supply. Over the past three years, investors have poured $330 billion into approximately 26,000 AI and machine-learning start-ups, according to PitchBook. This is two-thirds more than the amount spent funding 20,350 AI companies from 2018 through 2020. The AI revolution is expected to come with a hefty price tag, and tech companies are scrambling to figure out how to close the gap between their expenses and potential profits.
Key takeaways:
- Several high-profile artificial intelligence start-ups are facing financial pressure, with some folding their original business, laying off employees, or struggling to close the gap between sales and expenses.
- The development of generative A.I., the technology behind chatbots, requires billions of dollars, and competing with tech giants like Google, Microsoft, and Meta may not be feasible for many start-ups.
- Investors have poured $330 billion into about 26,000 A.I. and machine-learning start-ups over the past three years, two-thirds more than the amount spent funding 20,350 A.I. companies from 2018 through 2020.
- The cost of building A.I. systems has shocked tech industry veterans, with generative A.I. models costing billions to create and maintain due to the need for cutting-edge chips and the high cost of each A.I. system query.