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The challenge for small businesses to compete with Microsoft and Google is billions of dollars. And even that wouldn’t be enough.
By Cade Metz, Karen Weise and Tripp Mickle
Cade Metz and Tripp Mickle reported from San Francisco and Karen Weise from Seattle.
Call it the end of the beginning of the I. A. boom.
Since mid-March, monetary pressure has been felt in several flagship synthetic intelligence companies. Inflection AI, which raised $1. 5 billion but made almost no money, ended its initial operations. Stability AI laid off workers and abandoned its tactics with its executive leader. And Anthropic scrambled to close the roughly $1. 8 billion gap between its modest sales and huge expenses.
R. I. La revolution, as is evident in Silicon Valley, will come at a very high price. And tech corporations that have staked their long-term on this are scrambling to find a way to close the gap between that spending and the profits they hope to make. do at some point.
This challenge is especially dire for an organization of leading startups that have raised tens of billions of dollars for the advancement of generative AI, the generation of chatbots like ChatGPT. Some of them already know that competing head-on with giants like Google, Microsoft, and Meta is going to cost them billions of dollars, and even that might not be enough.
“You can already see what’s written on the wall,” said Ali Ghodsi, chief executive of Databricks, an analytics and knowledge warehouse company that works with AI startups. “It doesn’t matter how great you do: is it commercially viable?”
While a lot of money has been spent during other tech booms, spending on AI for construction has increased. The formulas surprised tech industry veterans. Unlike the iPhone, which kicked off the most recent technological transition and charges a few hundred million dollars to expand because they rely heavily on existing components, generative AI models cost billions to create and maintain. The state-of-the-art chips they need are expensive and scarce. And each and every question of an AI. The formula costs a lot more than an undeniable Google search.
Investors have poured $330 billion into about 26,000 AI projects and startups over the past three years, according to PitchBook, which tracks the industry. That’s two-thirds more than the amount spent on investing 20,350 AI projects in companies from 2018 to 2020.
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