Investors Dubious That AI Revolution Will Yield Revenues

Artificial intelligence is undergoing a revolution, but investors aren’t sure it will make them money.

That’s according to a Tuesday (March 7) Financial Times (FT) report, which found skepticism among venture capital firms about the latest developments in AI.

“Everyone has stars in their eyes about what could happen,” Gordon Ritter, founder of San Francisco’s Emergence Capital, told FT. “There’s a flow [of opinion that AI] will do everything. We’re going against that flow.”

There’s tension among Silicon Valley investors, who find themselves weighing the buzz around AI against the recent tech downturn, per the report.

The rise in popularity of Open AI’s generative AI technology has led to some significant Big Tech investments, part of what PYMNTS has called “the long shadow cast by ChatGTP.”

Among these is Google’s $300 million partnership with AI firm Anthropic last month, and Microsoft’s January decision to invest $10 billion in Open AI itself.

However, many venture firms are showing caution, per FT, with one investor comparing recent advances in generative AI to the moon landing: a huge accomplishment made possible only with the financial resources of something like the U.S. government.

The past week has seen other governments announce AI-related investments, like the $300 million the U.K. has set aside for the technology, and the Czech Republic’s new $58 million fund to support AI research.

“Companies are extremely overvalued and the only justifiable investment thesis is to get in incredibly early,” said another investor, according to FT. “Otherwise you’re only buying in because of FOMO.”

Meanwhile, reporting by PYMNTS shows the promise of AI in less flashy but still critical areas of business.

“There are many spaces [within financial services] that AI and machine learning can influence,” Andy McHale, senior director of product and market strategy at Spreedly, told PYMNTS earlier this month.

For example, he said that machine learning and AI could speed through calculations and find patterns and strategies that a human — or teams of humans — cannot do on their own.

“We just can’t get there, or the scale does not exist,” he said.

The technology can also help with a vital function of payments — making sure that the person you’re paying is who they say they are — something that has become harder than ever to satisfy, said Manish Jaiswal, chief product and technology officer at Corcentric.

AI, when used in combination with machine learning, can analyze large data sets in real time, providing businesses with the information they need to safely execute payments or halt them.