Hype or not, the potential of AI has tech companies enamored, and businesses large and small have begun betting heavily on efforts that leverage AI in some fashion to spur their growth to new heights.
These wagers have come in many forms. Firms like PwC and Accenture have promised to spend heavily on the sector, while others are creating new AI-focused capital pools and directly investing in AI-focused startups. A large number of tech companies today are also tapping their operating cash flow to add AI to their existing products and services.
There’s an all-out race to leverage AI to add more utility and value to products, and to reap a portion of the resulting demand in AI-powered products and services.
It appears this sector is resilient to the broader macroeconomic headwinds that have been affecting deal-making and fundraising in the tech world. If trends in deal-making continue, this year could go on to see the third-highest number of deals completed by AI startups in the expansion stage, according to Deloitte’s latest Road to Next report.
Investors are paying attention, too, and nearly every tech company’s quarterly results conference call has been full of analysts asking how the company in question will find growth or operating leverage with AI-related tooling.
TechCrunch wrote earlier this year that a tech company’s AI posture was among the most important measures of their present worth. That has only become more true since.
This afternoon, we’re sorting through major promises, investments and some product news to underscore how broad the AI push has been in the larger enterprise software space.
Is the current AI boom a startup story? Yes. It is a Big Tech story? Yes. Are we seeing an entirely new generation of software being built and sold? Yes. Let’s get our heads around just how broad the AI moment truly is.
Big checks, big bets
Today, it seems nearly pedestrian that Microsoft in 2019 put $1 billion into OpenAI for licensing its tech and built a custom supercomputer in the Azure cloud. The figure was later dwarfed by $10 billion arrangement between the companies, but Redmond did help set the tone for how much capital was going to flow — and perhaps how much the sector would need — into AI-related work.
Microsoft is hardly the only tech titan to pour money into AI startups. Anthropic, a startup that wants to raise billions to take on OpenAI, recently raised $450 million from a host of Big Tech fixtures: Google, Salesforce and Zoom joined venture capitalists in that deal. Google previously led a $300 million round for Anthropic, which in addition to capital had Anthropic choose Google Cloud as its preferred cloud provider.
Cohere, another generative AI startup, is also landing buckets of big tech cash. Its $270 million round from last month included cash from SentinelOne, Salesforce, Oracle and Nvidia, along with venture investors. Nvidia is especially eager to add fuel to the AI fire, having briefly joined the $1 trillion valuation club thanks to strong AI-related hardware and cloud sales.
Hell, Salesforce recently doubled its AI investment fund and announced a host of new AI-related products.
The list goes on. Microsoft is working with Builder.ai and also investing an undisclopsed amount in it, and generative AI startup Synthesia recently raised a huge round that included capital from Nvidia and Google’s venture capital arm, GV.
Then we have Adept, whose last round included capital from Nvidia, Microsoft and Workday’s corporate venture arm.
And that’s just the start. The consultants also want to play.
Everyone wants to hold the ball
This week, Accenture announced that it will invest $3 billion in AI over the next three years. The bulk will be put toward staffing. The company plans to double its AI-focused army of consultants to 80,000 through a mix of hiring, acquisitions and training.
Not to be outdone, PwC said it would spend $1 billion on AI over the same time frame to expand and scale its AI offerings. As part of the push, PwC will partner with Microsoft to create offerings using OpenAI’s GPT-4 and ChatGPT alongside Microsoft’s Azure OpenAI Service, which packages OpenAI technologies in an enterprise-friendly format.
There wasn’t a dollar amount attached to SAP’s announcement of enterprise-focused AI products for the supply chain, but the company did say that it would integrate its solutions with the Azure OpenAI Service and Microsoft 365 Copilot to expand its freight and logistics capabilities.
McKinsey, too, believes in the power of AI, even if it’s not trumpeting its investments in the tech. In one of the consultancy’s latest reports, it estimates that generative AI could add $4.4 trillion annually to the global economy, almost the economic equivalent of adding an entire new country the size and productivity of the U.K. ($3.1 trillion GDP in 2021) to the world.
Don’t think it’s just funds, partnerships and companies straining to avoid being relegated to the past. There’s even more going on.
It’s all AI, everywhere you go
Samsung is reportedly joining Google, Microsoft and other companies to incorporate ChatGPT-like generative AI into its products. The South Korean tech giant is partnering with Naver, the South Korean internet conglomerate, to develop the AI tools.
Meanwhile, Intuit has expanded its platform with what it calls GenOS, a generative AI system that the company says will allow it to design, build and deploy “breakthrough” AI experiences for its customers. GenOS features custom-trained financial large language models that specialize in solving tax, accounting, marketing, cash flow and personal finance problems, as well as a dedicated AI development environment, GenStudio, and a library of modular UI components.
IBM has high hopes for AI — so high that it plans to pause hiring for roles it thinks could be replaced by AI in the coming years. Optimistic? Perhaps. But the company’s putting its money where its mouth is, rolling out a slew of new AI services in recent months including generative models.
ServiceNow’s efforts are less ambitious, but they’re worth noting. This week, the company launched a virtual agent service that allows customers to embed direct access to general-purpose models from OpenAI and Microsoft’s Azure OpenAI Service. This, along with other new AI features along those lines, will allow companies to achieve a more personalized, relevant and contextual self-service experience, ServiceNow asserts.
What are the chances everyone is wrong?
This post is a partial rundown, a selected recap. We believe that there are far more examples of corporate spend on AI work today in terms of dollars, time and focus than we could ever hope to cover in a single post.
The question at this juncture is will the bets pay off? Some think they won’t, but if reality proves different, it’ll be a reckoning for C-suites and VCs alike. Is Silicon Valley doomed to fall victim to the hype cycle once again? It’s too early to say for certain.
This time, at least to these writers, something feels different. We’ll see if that ends up being the case.