One sign the artificial intelligence market is heating up: global AI investment in 2024 has already surpassed how much funding the industry received in 2023, even before factoring in the fourth quarter of the year.
That was a key takeaway from Ben Parr’s latest post on his “A.I. Update” newsletter out Monday. Through Q3 2024, global AI funding hit $55.3 billion — which is already $1.2 billion more than the industry received last year.
That also puts the AI industry on track to surpass its 2022 total, when there was $59.9 billion in deals. Still, even with the uptick in funding, 2024 will likely fall well short of the $92.2 billion the industry received in 2021, a year in which low interest rates and tech advancements spurred funding.
The above figures were compiled by CB Insights, a New York-based market intelligence firm, and included in the graph, below:
Another indicator that the appetite for AI remains robust is in the number of deals taking place. There were 1,245 deals made between July and September, per CB Insights — second only to Q1 2022 in terms of total deals. Those 1,245 deals represented a 23% increase from the same period in 2023, when AI deals had only increased 4.5% year-over-year.
In terms of total deals, 2024 has had 3,144 deals, putting it on pace to top the 4,058 deals that were made last year. Plus, most of the recent deals have been “mega-rounds” of at least $100 million; CB Insights’ data showed 51% of deals in Q3 and 69% in Q2 were mega-rounds.
The uptick in investments has likely been noticeable to anyone who tracks the space. There have been several big deals this year, including Elon Musk’s xAI raising $6 billion at a $24 billion valuation in May, while his rival, Sam Altman, spearheaded OpenAI’s $6.6 billion funding round in October. His OpenAI is now valued at $157 billion following the investment, which was led by Thrive Capital and also included Nvidia, Fidelity, SoftBank and Microsoft, one of the company’s early investors.
An interesting conclusion from Parr’s summary is that venture capitalists have been pouring more money into “a few proven winners,” like Musk and Ilya Sutskever, the former OpenAI co-founder who attempted to oust Altman in 2023; when Altman returned, Sutskever resigned. His new venture, Safe Superintelligence, raised $1 billion in September.
VCs are holding off on betting on long shots, Parr believes, because they’re having a harder time fundraising. That may change in 2025, though, if President-elect Donald Trump gets the lower interest rates he called for while on the campaign trail.
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