In San Francisco, suddenly there is no escape from AI hysteria.of In bars and restaurants, people are discussing how to use ChatGPT and whether AI will take their jobs or conquer the world. AI is one of the only areas still hiring here, and companies are paying big salaries for their expertise. Workers here are being retrained to specialize in this area.
The new AI gold rush was largely driven by OpenAI’s ChatGPT release in November, but thanks to generative AI. Generative AI uses complex algorithms trained on trillions of words and images from the open internet to generate text, images, and audio.
“The quality improvement was much bigger than we expected,” said Dan Wang, a business professor at Columbia University who studies the tech industry, of the emergence of generative AI. “This surprised people and unleashed the imagination of both existing and would-be entrepreneurs.”
Following OpenAI’s release of ChatGPT, Microsoft and Google also joined the arms race. Both companies have been relatively cautious about bringing experimental AI tools to real people, but suddenly they’re throwing text generators into their core products like Microsoft Word and Google Search. began to compete with each other.
At Google’s parent company Alphabet’s latest earnings call, CEO Sundar Pichai made mention of AI in his opening remarks 34 times, up from five last year. A mashup video of him saying “AI” at the company’s development conference later went viral on social media.
“We are at an exciting tipping point,” Pichai said at the conference. “We are rethinking all our core products.”
Facebook and Amazon have also promoted their own AI research, and Apple is expected to put AI research in the spotlight at its big product launch event this week.
Companies are also throwing in, and one of the biggest beneficiaries so far is Nvidia.
The company’s video game computer chips have been used by researchers and companies for years to help run the large-scale, complex algorithms needed to train cutting-edge AI programs. The company began making products and software specifically for AI, and its stock has already quadrupled between late 2019 and early 2023.
But last week, the company said it expects to sell $11 billion in new chips in the second quarter of this year, $4 billion more than Wall Street analysts expected. Shares soared 24%. Market valuations closed at $971.4 billion on Friday.
That’s nowhere near as good as Amazon, which is worth $1.26 trillion. Nvidia’s Chief Financial Officer (CFO) Collette Kress called the launch of ChatGPT another “iPhone moment,” comparing it to when the world realized that mobile phones would completely change the way people use computers. I’m here.
“What else can I say other than just ‘wow!'” Evercore analyst CJ Muse said in a note to clients. “We’ve never seen a beat like this… ever.” Big companies and start-ups alike are “seeking” to buy Nvidia products, Muse said.
Tech stocks surged across the board in a return to whiplash growth after analysts declared a decade-long bull market finally over. In 2022, the Nasdaq 100, the stock market index dominated by the biggest tech companies, will drop 33%, losing an entire third of its value after a massive loss of wealth accumulated over the past decade. bottom. So far in 2023, the Nasdaq 100 is already up 31%.
Even Metaverse, which changed its name from Facebook to show its commitment to virtual reality technology, is promoting AI among its employees, with some employees at internal meetings stating that the Metaverse is still a priority. Some even asked if it was. Amazon executives made it clear to their employees that the company is also working on major AI initiatives.
The startup ecosystem is also returning to optimism, at least for companies focused on AI.
“Venture capital firms are racing for access to hot AI deals while avoiding unprofitable traditional software companies,” said Pitchbook analyst Brendan Burke. “AI startups are experiencing a founder-friendly landscape that no other technology ecosystem has.”
About $12.5 billion has been invested in generative AI startups so far this year, but only $4.5 billion will be invested in the space in 2022 as a whole, according to Burke.
Suvrat Bhooshan, a former AI researcher at Meta and founder and CEO of Gan.ai, a startup that lets people automatically create customized videos of themselves, said investors such as Sequoia Capital and Emergent Ventures raised $5.25 million from Bhushan said some investors provided him with a full-fledged term sheet just a week after the initial introduction, so the deal closed quickly.
Bhushan says he’s not the only former Big Tech AI employee to retire and start his own company. In the past two years, he said, three of his seven people on Meta’s team or four of him have left to do their jobs. Something similar is happening across the industry, demonstrating a desire among AI practitioners to capitalize on the boom in venture capital to launch their own companies.
“The entire Transformers team at Google quit to start their own company,” Bhushan said of the Google researchers who wrote the paper on “transformers,” an important aspect of today’s generative AI. Mentioned.
Optimism for the AI sector contrasts with the massive job cuts that have rocked the industry for months. Thousands of tech workers are still out of work after a massive wave of layoffs that swept through Microsoft, Amazon, Facebook, Google, as well as dozens of startups over the past year. The rising interest rates that have caused anxiety for tech companies that have borrowed heavily to finance their continued growth are unlikely to go away.
And the non-AI landscape may continue to languish. The number of deals and valuations won by non-AI startups continued to fall throughout the year, with the median late-stage startup valuation down 40% from the same period last year, according to PitchBook.
Employees at Google and others fear more layoffs. The failure of Silicon Valley Bank terrified tech investors and made it difficult for startups to get the debt they needed to get their businesses off the ground.
Home prices are slowly falling in San Francisco, and the commercial rental market is in crisis, demonstrating the impact on the economy as a whole.
Wang, a professor of management at Columbia University, said AI won’t change that overnight.
“It’s really exciting,” he said. “But it’s very difficult to say that it’s the kind of event that will bring us back to the bull market.”
