What happened to the artificial-intelligence investment boom?

Jan 8, 2024 ·

The artificial intelligence (AI) investment boom of the early 2020s was remarkable for its speed and scope. In just two or three years, companies around the world poured billions of dollars into AI-focused startups and research projects.

At first, the investment boom was largely driven by tech giants like Google, Microsoft, Amazon, and Apple who saw potential in a technology that could improve their products and services. As more money flowed into the sector, investors from outside the tech industry began to take notice. Venture capitalists, private equity firms, and hedge funds all saw opportunities in the space.

In just two years, the global AI market grew from $30 billion to nearly $90 billion and was estimated to be worth as much as $1 trillion by 2024. Despite this incredible growth, however, the AI investment boom appears to have stalled in recent months.

There are several possible explanations for why the AI investment boom has cooled off. The most obvious is that the sector has become saturated, with many of the key companies and technologies already established. This has meant fewer new opportunities for investors, and less enthusiasm for the sector overall.

Another reason is that some investors may have overreacted, pouring too much money into the sector and creating an unsustainable bubble. With the money already invested, few new opportunities remain for the same level of return.

Finally, the current economic climate is challenging for venture capital investments. With global markets deeply affected by the pandemic, many investors are now reluctant to take on any high-risk investments.

Despite the slowdown in investment, AI remains a highly promising technology with tremendous potential. As the economy recovers and new opportunities arise, the AI investment boom could return. However, it is unlikely to reach the same heights as it did in the early 2020s, and investors will have to be more cautious and selective when investing in the sector.