StabilityAI, once a billion-dollar AI start-up, is facing a slumping fortunes after record investment in AI but scant profit except for a few chip-makers. The co-founders of Inflection AI left for Microsoft, and the industry is increasingly defined by unsustainable amounts of cash, computing power, energy, and hype. Last year saw record investment in AI but scant profit except for a few chip-makers.
Instability AI, once among the world’s buzziest startups, was valued at $1 billion in 2022, thanks largely to its flagship AI model, Stable Diffusion. However, the company has seen a wave of staff exits, including key scientists behind Stable Diffusion. Venture capitalists funneled $29 billion into generative AI last year, up from under $8 billion in 2022. Demis Hassabis, co-founder of DeepMind, once said the wave of investment “brings with it a whole attendant bunch of hype and maybe some grifting.”
The ultimate aim for many of these companies is AGI – artificial general intelligence – an idea with no strict definition. Startups are scrambling to produce a technology that is vaguely intelligent but has no defining characteristics. ChatGPT, OpenAI’s viral chatbot, can hold impressive conversations but is still prone to hallucinations. Google announced a pioneering AI tool that helped discover 2.2 million new crystals, which it promised could help with everything from powering smartphones to the energy transition.
The price of entry to the gen AI club is so high that most minnows go to the wall or get eaten by one of a small and rapidly shrinking number of barracudas. Struggling start-ups like Stability and Cohere can make Trump Social look robust, while Microsoft, Alphabet, and Meta form an emerging generative AI oligopoly.
