A complex and dynamic landscape is taking shape in the field of AI. Hundreds of startups are rushing to develop foundation models, AI-native apps, and infrastructure, with models like Stable Diffusion and ChatGPT setting historical records for user growth. However, the critical question that looms large is where the value will accrue in this market. Observations suggest that infrastructure vendors are likely the biggest winners so far, capturing the majority of dollars flowing through the stack. Application companies are growing revenues quickly but often struggle with retention and differentiation, while model providers, though responsible for the very existence of this market, haven’t yet achieved large commercial scale. The generative AI market is a game-changer, and as it evolves, it’s poised to look much different, with tremendous value to be unlocked.
Some interesting details here from the team at a16z.