AI weather turns wild again

Prophets of a new AI winter held their breath in recent months as share prices of stocks like Nvidia, Microsoft and Google faced headwinds of investor nerves. But instead of an icy chill falling over the AI sector, the winds have turned into wild new storms of activity.

On Wednesday OpenAI, the company behind ChatGPT, completed a massive $6.6-billion funding round, valuing the company at $157-billion. That makes it one of the 100 most valuable companies in the world, and it is still private.

But as startling as the level of funding may be, it is not as significant as the array of companies that made up that investment. The list included existing investors Khosla Ventures and Thrive Capital, which led the round with a $1.2-billion investment, and OpenAI’s biggest corporate backer, Microsoft, at just under $1-billion. But new to the mix was Japan’s Softbank, which has suffered major investment setbacks despite presiding over the largest VC fund ever created, and AI chip darling Nvidia. The former came in with $500-billion, and the latter a “modest” $100-million. Add to the mix Abu Dhabi’s MGX and the aggressive Tiger Global Management, and one gets a sense that everyone is eager to have a sturdy AI umbrella over their heads.

Even Apple wanted a piece of the action, and had been in talks with OpenAI, but chose not to come in from the cold. Chances are it did not see the same potential for an instant return on investment as its rivals. OpenAI uses Microsoft’s Azure cloud computing services and Nvidia’s graphics processors that are optimised for AI. In a way, the investment from the two companies will flow right back long before their shares pay dividends.

It was probably coincidence that Thursday saw an announcement from Microsoft’s arch-rival Google, which last year backed OpenAI rival Anthropic to the tune of $2-billion, of a range of new AI advances that Google Search would make available to mobile users. Google has been building out its public AI tools for the past two years, and its Google Lens is now used for nearly 20-billion visual searches every month.

It announced on Thursday: “In one of our most significant updates to Lens, we’re launching the ability to search with video in Lens and ask complex questions about moving images and voice input in Lens, so you can ask questions out loud while snapping a photo (or recording video) to more easily search what you see.”

The Google search app for Android devices will also organise results with AI, providing a search results page to help users explore content and perspectives from across the web. AI Overviews, which already provide an enhanced search experience, will now include links to relevant web pages directly within the text of the result.

Last week also saw arch-rival Microsoft announce “the next wave of AI innovation” coming to its Copilot AI platform as well as to the Windows operating system.

Much of it sounds like playing catch-up, but then Microsoft cannot exactly ignore the new functions made possible by continual advances in generative AI. For example, this week, it began to roll out a refreshed Copilot, with updated apps for iOS and Android devices, as well as for the web-based Copilot and the Copilot Windows app. New and enhanced features like Copilot Voice, Copilot Daily, Personalised Discover, and Copilot Vision sound like Google equivalents, but Microsoft takes the lead in rolling them out across all platforms instead of one mobile environment.

Windows also gets a refresh, with Microsoft this week rolling out the Windows 11 2024 Update, as “a full operating system swap that contains new foundational elements required to deliver transformational AI experiences”.

Who will be swept away by the storm?

* Arthur Goldstuck is CEO of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on social media on @art2gee.

• This article first appeared in The Sunday Times.