After three consecutive years of decline, funding for private cloud and artificial intelligence (AI) companies across the U.S., Europe, and Israel is on the rise, indicating a strong rebound in 2024.
According to the latest report from Accel, a prominent US venture capital (VC) firm, investments have increased by 27% since 2023, and a staggering 65% increase compared to 2020.
These companies have secured a total of USD 79.2 billion in funding as of October 10, 2024. This resurgence is largely driven by generative AI, confirming the growing excitement and demand for AI.
2024 Euroscape Report, Axel and released In October, we will examine key cloud and AI trends and highlight how AI is driving recovery in both private and public markets.
They point out that much of this year’s growth in crowdfunding is related to increased interest in AI technology.
Investments in GenAI will reach USD 32 billion as of the first year of 2024, representing 40.3% of total funding in private cloud and AI companies. The United States dominates this investment landscape, accounting for approximately 80% of the USD 56 billion raised by genAI companies through 2023 and the first year of 2024, while Europe and Israel account for 20%.
Major funding rounds demonstrate the scale of investment in AI. In October, American company OpenAI, which develops the widely popular chatbot ChatGPT, raised A funding round valued at USD 157 billion raised an impressive USD 6.6 billion.
Similarly, Magic, an American AI startup that creates models to automate code generation and software development, safe In August, the company raised a funding round of US$320 million.
Meanwhile, in September, AI-powered search startup Glean raised Series E for over $260 million.
Just this week, Elon Musk’s AI company xAI safe It was a huge funding round of 6 billion USD, and the total amount was 12 billion USD per year.
Amazon is also increasing its investment in the AI field. investment In November, it invested an additional $4 billion in Anthropic, a San Francisco-based company that develops the Claude chatbot and AI models. Amazon’s total investment in AI companies now stands at $8 billion.
Impact of AI on public markets
Beyond private markets, AI is also driving public market recovery. According to a report from Accel, the Nasdaq has risen 38% in the past 12 months, with the six largest tech companies – Apple, Microsoft, Google, Meta, Amazon and Nvidia contributing US$5.3 trillion of the total value of US$8.4 trillion. did. Created during the period.
These companies are pumping billions of dollars into AI research and infrastructure. microsoft I invested Nearly $14 billion will be invested in OpenAI, while Google schedule Spend over US$100 billion to develop AI technology.
Apple is reportedly investing US$1 billion a year to catch up with genAI, including efforts such as its own large-scale language model called Ajax and an internal chatbot known as Apple GPT. Bloomberg reported that. reported In October 2023.
And Meta, the parent company of Facebook, said The company announced in April that it plans to increase its spending forecast this year to $35 billion to $40 billion to “accelerate infrastructure investments to support our AI roadmap.”
Despite strong growth in AI, the outlook for the overall cloud market is bleak. Geopolitical and macroeconomic uncertainties around the world and digesting high software spending in 2020/21 are putting pressure on both public and private cloud companies.
The Euroscape index, which tracks a select group of publicly traded cloud companies in the U.S., Europe and Israel hand-picked by Accelerator, has moved at half the pace of the Nasdaq. The average growth rate for these companies has fallen from a peak of 47% in Q2 2021 to just 15% in Q3 2024. In 2021, 23 companies in the index were growing more than 40% annually, compared to none today.
These numbers suggest that the era of high growth in software is coming to an end, leaving companies with no choice but to focus on profitability, the report said.
Featured image credit: Edited from freepic
