Despite warnings from some analysts regarding the risks of a speculative bubble around generative AI, investments in this sector continued to grow at an impressive pace in 2024, reaching a record level. According to data compiled by PitchBook for TechCrunch, GenAI companies globally have raised $56 billion across 885 deals, a dramatic 192% increase from 2023, which had already marked a solid year with $29.1 billion raised.
Growth driven by major fundraising
The 2023 enthusiasm for GenAI sparked by the arrival of ChatGPT at the end of 2022 has not diminished in 2024, far from it. According to Ali Javaheri, emerging technologies analyst at PitchBook, new products launched by OpenAI, Anthropic and xAI have continued to attract big investments.
Investor enthusiasm for generative AI was particularly evident in the fourth quarter of 2024. This quarter alone saw transactions totaling $31.1 billion, driven by record fundraising, including :
These phenomenal fundraising rounds highlight investors’ continued confidence in companies capable of developing competitive solutions in a rapidly evolving sector.
Mergers and acquisitions (M&A) accounted for only a small share of generative AI investments in 2024, totaling $951 million according to PitchBook. However, these figures exclude major, strategic transactions led by technology giants like Google, Microsoft and Amazon.
Google would have invested $2.7 billion to recruit a large part of the team at Character AI, a start-up specializing in chatbots, while acquiring its technologies. For its part, Microsoft spent $650 million to obtain Inflection’s AI models and integrate its CEO, Mustafa Suleyman. These moves underscore a targeted acquisition strategy to strengthen the internal capabilities of large companies while limiting market competition.
Unequal geographical distribution
American companies attracted the majority of generative AI funding in 2024. While start-ups outside the United States raised a more modest total of $6.2 billion, some are the exception with notable investments :
- Moonshot AI in Beijing, with $1 billion raised in February;
- Mistral AI, which attracted $640 million in June;
- DeepLbased in Cologne, with a $300 million raise in May;
- MiniMaxa Shanghai company, with $600 million in March;
- Section AIin Tokyo, which raised $214 million in September.
The pitfalls of a saturated market
However, this massive influx of capital raises questions about the sustainability of the current dynamic. Ali Javaheri warns that the market risks being oversaturated with start-ups offering similar solutions. He gives the example of four companies developing AI-based coding assistants, Augment, Magic, Codeium and Poolside, which each raised more than $100 million in 2024. Likewise, media start-ups have attracted dozens of millions of dollars at high valuations like ElevenLabs or Black Forest Labs.
High IT resource costs and pressure to achieve significant revenue add barriers to success. According to Ali Javaheri, only the best-funded companies will be able to continue to innovate in such a competitive landscape, leaving the lion’s share to players in the “infrastructure layer” of GenAI, like Crusoe and Lambda, who have secured $600 million respectively. and $300 million in 2024.
