The era of the unicorn has come to an end. Business is thriving for America’s tech giants. After a decline in 2022, the combined market value of Alphabet, Amazon, Apple, Meta, and Microsoft has skyrocketed by 70% to over $10 trillion since the beginning of 2023 due to the excitement surrounding artificial intelligence (AI). The technology has also propelled other companies into the upper echelons of the industry. On February 21st, Nvidia, a leader in AI-chip technology, reported a 265% year-on-year increase in sales in the quarter ending in January. Its market value has surged from around $500 billion a year ago to $1.7 trillion, making it the fifth most valuable firm in America. OpenAI, the creator of ChatGPT, and other AI developers like Anthropic have gained widespread recognition and secured billions of dollars in funding.
Thousands of smaller AI companies have also emerged. So much so that a small Caribbean island called Anguilla, with the internet domain suffix ”.ai”, now generates about a third of its government’s budget from licensing it out, according to Rest of World, an online publication. In a sign of the return of frenzy to Silicon Valley, Adam Neumann, the ousted founder of WeWork, an office-sharing company that declared bankruptcy in November after years of losses, made a bid on February 5th to regain control of the company.
However, it would be a mistake to assume that America’s startup scene is reverting to its previous exuberance. For one, the response from WeWork’s management and creditors to Mr. Neumann’s move has been tepid. Venture capital (VC) firms invested only $170 billion in the country last year, a 50% decrease from 2021, according to PitchBook, a research firm. With a few notable exceptions, such as OpenAI, investors have been particularly cautious about investing at high valuations. Throughout the 2010s, the number of unicorns—private companies with valuations exceeding $1 billion—soared in America. A total of 344 were created in 2021. The figure for last year was 45.
2024-02-22 08:47:41
Post from www.economist.com