Artificial Intelligence (AI) technology is becoming increasingly sophisticated, making it harder and more expensive for companies to develop and train the underlying models. The high costs of building and maintaining large language models (LLMs) have increased significantly. The industry still lacks standards for responsible AI best practices, and the number of new LLMs released worldwide in 2023 doubled over the previous year.
The AI market was projected to grow by 38% in 2023, with the use of AI projected to reach $6.8 billion and $7.2 billion, respectively. However, creating generative AI is an expensive venture right now and requires chips that are currently short in supply.
Digital rights activists have warned that this development is concentrating more and more cutting-edge expertise in the hands of a few powerful companies. This concentration of power and expertise in the hands of a few is a growing concern in the tech industry.
Investors who heavily invested in AI startups over the past few years are now seeking returns that have yet to materialize. According to investment tracker PitchBook, there has been $330 billion invested in approximately 26,000 AI startups over the past three years. This is a two-thirds increase from the period between 2018 and 2020.
However, most of these firms have not made the kind of industry-shifting advancements investors expect. They also need to spend more on infrastructure and computing. For example, Anthropic, founded by ex-OpenAIers, is spending $2 billion per year while only bringing in between $150 million to $200 million in sales.
Stability AI, the maker of the image generator Stable Diffusion, has been struggling to pay its bills after securing more than $100 million in fundraising in 2022. The company laid off 10 percent of its staff following the resignation of its ex-CEO, Emad Mostaque.
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