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Generative AI: Current Trends, Market Value, and Investment Opportunities

GOOVER DAILY REPORT September 14, 2024
goover

TABLE OF CONTENTS

  1. Summary
  2. Market Scale and Growth Forecast
  3. Proliferation of Generative AI Startups
  4. Venture Capital Investment Trends
  5. Sector-Specific Applications and Opportunities

1. Summary

  • The report titled 'Generative AI: Current Trends, Market Value, and Investment Opportunities' explores the dynamic and rapidly evolving landscape of generative AI. It provides a detailed analysis of market values, growth forecasts, startup proliferation, venture capital investment trends, and sector-specific applications. The market value of generative AI has grown significantly, reaching $44.89 billion in early 2024, with projections indicating a potential value of $1.3 trillion by 2032. The report highlights the broad adoption of generative AI technologies, with 92% of Fortune 500 companies utilizing them. Key companies such as Nvidia, OpenAI, and Anthropic are profiled for their significant roles in the industry. Venture capital investments have surged, totaling $21.3 billion in 2023, with a notable shift towards application-layer startups. Furthermore, the report discusses sector-specific opportunities and the contributions of leading companies like Nvidia, emphasizing the transformative potential of generative AI.

2. Market Scale and Growth Forecast

  • 2-1. Global Market Value and Forecast

  • The global generative AI market is currently valued at $44.89 billion, reflecting a significant increase from $29 billion in 2022. This marks a 54.7% rise in market value over the two-year period from 2022 to 2024. The market is projected to exceed $66 billion by the end of 2024. By 2032, the generative AI market is expected to potentially reach $1.3 trillion, which includes various revenue streams such as Infrastructure-as-a-Service (IaaS) and digital advertising.

  • 2-2. Industry Adoption Rates

  • 92% of Fortune 500 companies have adopted generative AI technologies, reflecting broad industry acceptance. Within marketing departments, 73% are currently utilizing generative AI. Furthermore, 64% of executives from surveyed businesses are looking to adopt generative AI in their workflows. Notably, among younger populations, 70% of Gen Z have tried generative AI tools.

  • 2-3. Economic Impact

  • The economic impact of generative AI is projected to range between $6.1 trillion to $7.9 trillion annually. This expansive impact is evidenced by an expectation that generative AI products could create up to 97 million new jobs by 2025, despite predictions of 85 million jobs becoming obsolete due to automation. Additionally, generative AI use in businesses could lead to productivity increases of up to 24.69%.

3. Proliferation of Generative AI Startups

  • 3-1. Current Number of Startups

  • As of early 2024, there are approximately 67,200 generative AI startups that are currently operating. This figure indicates a significant increase from around 50,000 companies identified in December 2023. Of these startups, about 25% are based in the United States, indicating the country's substantial presence in the generative AI sector.

  • 3-2. Future Growth Projections

  • The generative AI market is anticipated to continue its rapid growth. The market for generative AI solutions is projected to reach $143 billion by 2027, reflecting a compound annual growth rate (CAGR) of 35.6% from 2023 to 2028. Additionally, the annual growth rate is expected to average around 37.3% between 2024 and 2030, highlighting the robust and dynamic nature of the industry.

  • 3-3. Key Companies and Their Focus Areas

  • Several notable companies are at the forefront of the generative AI landscape. These include: 1. **OpenAI** - Known for its Sora text-to-video model, OpenAI has a significant funding of $11.3 billion. With 770 employees, it offers advanced capabilities in AI research and development. 2. **Anthropic** - Focused on responsible AI development, Anthropic has raised $4.1 billion, employing 267 individuals and offering products such as the Claude 2.1 chatbot. 3. **Hugging Face** - Specializing in open-source AI projects, this startup has funding of $395.2 million and plays a crucial role in the AI community. 4. **Glean** - Founded in 2019, Glean collaborates with Fortune 50 companies and has raised $100 million. The firm focuses on enhancing data search capabilities. 5. **Jasper** - This platform has $1.5 billion in funding and is well-known for its marketing-related generative AI solutions, employing 150 people. 6. **Perplexity AI** - With a funding of $520 million, this startup focuses on AI chatbots and search engine applications, employing 38 individuals. 7. **AI21 Labs** - Offering versatile generative AI solutions, AI21 Labs has received $1.4 billion in funding, though the size of its workforce remains unspecified. These companies are collectively shaping the future of generative AI and significantly influencing various industries.

4. Venture Capital Investment Trends

  • 4-1. Investment Volumes in 2023 and Q1 2024

  • In 2023, global venture capital investment in generative AI totaled $21.3 billion, exhibiting a significant increase in interest compared to previous years. The growth was overwhelmingly supported by major investments from technology firms, including $10 billion by OpenAI from Microsoft, $4 billion by Anthropic from Amazon, and $1.3 billion by Inflection from Microsoft. During the first quarter of 2024, $3 billion was invested in generative AI, with projections indicating that total global investment could reach $12 billion for the year if the trends from Q1 continue. This forecast signifies an increase of nearly 100% from the prior year when excluding the substantial mega investments.

  • 4-2. Major Investors and Geographical Distribution

  • North America has emerged as the predominant region for generative AI investments, capturing the majority of the global funding to date. The landscape indicates a robust investment atmosphere driven by US-based technology companies and hyperscalers. There are preliminary signs that investors are increasingly seeking opportunities in Europe to diversify their portfolios. Countries like Ireland stand out due to their favorable business conditions and growing technology ecosystems, suggesting that they might attract significant venture capital investments in the generative AI sector.

  • 4-3. Shift Towards Application-Layer Startups

  • A notable trend in the generative AI landscape is the increasing investor focus on application-layer startups, as opposed to foundational model companies. Eight out of the ten largest generative AI deals in Q1 2024 were directed towards companies developing applications that utilize third-party foundational models. In the same period, these application-layer firms received twice the amount of investment compared to the same timeframe in 2023. This shift reflects a growing interest in tailored solutions that meet specific market demands, even as foundational models continue to secure substantial funding.

5. Sector-Specific Applications and Opportunities

  • 5-1. Leading Sectors Benefiting from Generative AI

  • The document identifies multiple sectors that are set to benefit from generative AI technology. Key industries include those leveraging advanced hardware, data processing capabilities, and artificial intelligence talent. Notable companies such as Nvidia are expected to lead due to their cutting-edge hardware, while companies like Google and Microsoft leverage vast datasets for enhancing their AI models.

  • 5-2. Key Player Contributions

  • Significant players in the generative AI landscape have been highlighted for their respective contributions. Nvidia, as a GPU manufacturer, is noted for its leading role in providing the necessary computing power for training AI models. Companies like Google, Amazon, and Microsoft are recognized for their vast amounts of data and established AI capabilities. Furthermore, firms such as OpenAI and IBM exemplify the importance of talent in driving AI advancements.

  • 5-3. Potential for Disruption and Growth

  • Generative AI presents substantial potential for disruption across various industries. The convergence of GPUs, massive data sets, and specialized talent creates rich opportunities for innovation and growth. The report emphasizes that while generative AI is still in its early stages, the ongoing developments could lead to significant advancements and expansions across multiple sectors, ensuring that key players are well positioned to leverage these opportunities.

6. Glossary

  • 6-1. Generative AI [Technology]

  • Generative AI refers to technology that can produce new content or data by learning patterns from existing data. It is increasingly adopted across various industries for its transformative potential and ability to drive innovation and productivity.

  • 6-2. Nvidia [Company]

  • Nvidia is a leading GPU manufacturer essential for the computing power required in generative AI. Its products support various AI models, making it a critical player in the AI hardware landscape.

  • 6-3. OpenAI [Company]

  • OpenAI focuses on creating and promoting friendly AI. It is notable for its foundational AI models and has garnered significant attention and investment due to its innovative and responsible AI solutions.

  • 6-4. Anthropic [Company]

  • Anthropic is an AI safety and research company focusing on building reliable and interpretable AI systems. It is recognized as a key player in developing foundational AI models and securing investments.

7. Source Documents