AI automations

Business owners and stakeholders often ask themselves what is the value that they can derive from AI.

It could be interesting to see the different segments of the industry supply chain that deliver generative AI applications and what value (different measures from revenue growth to funding raised & valuation figures & multiples) impact they have been having.

From a sample of players in different segments, an attempt has been made to derive some broad insights.

Chipmakers

  1. Nvidia
    • Revenue Impact: Nvidia’s most recent quarterly revenue for the third quarter of fiscal 2025 ended October 27, 2024 is $35.08 billion reflecting a year-on-year growth of 94% & Net Income of $19.31 billion, a 109% rise from $9.24 billion year-over-year,. Nvidia has significantly benefited from the AI wave, becoming a leader in AI chip production. Its stock has surged over the past year.[i]
    • Impact: Nvidia is pivotal in powering AI servers for applications like ChatGPT, positioning it as a critical player in the AI revolution.
  2. AMD
    • Revenue Impact: AMD reported a record data center revenue of $2.8 billion in Q2 2024, up 115% year-over-year, with its AI chips contributing significantly.[ii]
    • Impact: AMD is emerging as a major competitor in the AI chip market.
  3. TSMC
  • Revenue Impact: For the third quarter ended September 30, 2024, TSMC reported revenues of $23.5 billion, reflecting a 36% year-over-year growth (reported October 17, 2024)[iii].
  • Impact: As a leading semiconductor manufacturer, TSMC remains central to AI hardware innovation.

[i] https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-third-quarter-fiscal-2025

 

[ii] https://www.fastcompany.com/91165593/why-are-ai-chip-chipmaker-stocks-up-amd-q2-earnings-nvidia-tsmc

 

[iii] https://www.theregister.com/2024/10/17/tsmc_q3_2024/

Cloud services providers

  1. Amazon Web Services (AWS)
    • Revenue Impact: AWS reported a 19% increase in sales to $27.5 billion for the third quarter ending September 30, 2024, driven by investments in AI technologies.[i]
    • Funding and Investments: Over $30 billion invested in AWS infrastructure, including AI chips.
    • Impact: AWS is integrating AI extensively across its services and partnerships.
  2. Google Cloud
    • Revenue Impact: Google Cloud’s revenue increased 35% to $11.4 billion as reported on September 30, 2024, led by growth in AI Infrastructure and Generative AI Solutions.[ii]
    • Impact: Google Cloud is driving deeper product adoption and winning larger deals with its AI solutions.
  3. Microsoft Azure
    • Revenue Impact: Microsoft Cloud revenue rose to $38.9 billion, up 22% year-over-year for the quarter ended September 30, 2024, driven by AI platform adoption.[iii]
    • Impact: Microsoft is expanding its AI platforms and tools, transforming work processes and driving new growth.

[i] https://apnews.com/article/amazon-be372ef0caaab068b2d0cd256aa9e716

[ii] https://www.neowin.net/news/google-posts-strong-q3-2024-results-with-google-cloud-revenue-up-35-to-114-billion/

[iii] https://www.microsoft.com/en-us/Investor/earnings/FY-2025-Q1/press-release-webcast

LLM Model Developers

  1. OpenAI
    • Funding: Raised $6.6 billion in October 2024 at a valuation of $157 billion from investors like Microsoft.[i]
    • Revenue Impact: Projected to reach $3.7 billion in revenue by 2024.
    • Impact: OpenAI’s ChatGPT has rapidly grown, showcasing the transformative potential of generative AI.
  2. Anthropic
    • Funding: Secured $2.7 billion in March 2024. [ii]
    • Impact: Developer of Claude, an AI assistant, marking its influence in the AI sector.

[i] https://techcrunch.com/2024/10/02/openai-raises-6-6b-and-is-now-valued-at-157b/

 

[ii] https://tracxn.com/d/companies/anthropic/__SzoxXDMin-NK5tKB7ks8yHr6S9Mz68pjVCzFEcGFZ08/funding-and-investors

 

Tech Stacks for building LLM Applications

  1. Cohere
    • Funding and Partnerships: Cohere has raised $500 million in new funding on July 22, 2024, valuing the company at $5.5 billion. This is more than double its valuation from June 2023, when it secured $270 million, bringing its total funding to $970 million Cohere is backed by Google Cloud and Oracle, focusing on AI model development and integration.[i]
    • Revenue: Cohere’s annual recurring revenue (ARR) was $35 million as of the end of March 2024.
    • Impact: Cohere is developing sophisticated AI systems, highlighting the costly nature of scaling generative AI technologies.
  2. Perplexity
    • Funding: Perplexity is raising a new funding round of $500 million as of November 2024, which would value the company at $9 billion. Previously, Perplexity raised $73.6 million in Series B funding, which valued the company at approximately $520 million. [ii]
    • Revenue: As of October 2024, Perplexity AI’s annual recurring revenue (ARR) is estimated at $51 million, reflecting a 1,600% year-over-year growth. This substantial increase underscores the company’s rapid expansion in the AI search engine market.
    • Impact: Perplexity provides internet-based AI solutions backed by prominent investors like Jeff Bezos.
  3. LangChain
    • Funding: Raised $35 million including $25 million in its Series A round on February 15, 2024.[iii]
    • Impact: LangChain offers an application development framework for building AI solutions.
  4. Crew AI
    • Funding: Raised $18 million to support growth in AI agent development announced on October 22, 2024.[iv]
    • Impact: Crew AI provides a framework for building collaborative AI agents.

[i] https://techcrunch.com/2024/07/22/cohere-raises-500m-to-beat-back-generative-ai-rivals/

[ii] https://www.businesstimes.com.sg/startups-tech/startups/perplexity-raising-new-funds-us9-billion-valuation-source

[iii] https://tracxn.com/d/companies/langchain/

[iv] https://siliconangle.com/2024/10/22/agentic-ai-startup-crewai-closes-18m-funding-round/

Databases for building LLM Applications

  1. Pinecone
    • Funding: Raised $138 million including $100 million Series B round raised in April 2023 bring it’s valuation to $750 million. Pinecone’s last known annual recurring revenue (ARR) is estimated to be around $7.1 million as of May 2023[i]
    • Impact: Pinecone provides a vector database for storing contextual data for LLMs, supporting in-context learning and AI-powered applications.

[i] https://research.contrary.com/company/pinecone

 

LLM Applications

  1. CaseText
    • Impact: Acquired by Thomson Reuters for $650 million on August 17, 2023, CaseText integrates AI into legal solutions, enhancing productivity and access to justice.[i]
  2. Sierra AI
    • Funding: Raised $175 million on October 28, 2024 valuing the company at $4.5 billion.[ii]
    • Revenue: ARR of $20 million
    • Impact: Sierra focuses on AI-powered customer service chatbots, serving clients like WeightWatchers and Sirius XM.
  3. Anysphere
    • Funding: Raised $60 million in a Series A round on August 9, 2024 at a valuation of $400 million. [iii]
    • Revenue: As of October 2024, Anysphere, the developer of Cursor AI, reported a monthly revenue of $4 million. This represents a significant increase from April 2024, when the company had an annualized recurring revenue (ARR) of $4 million.
    • Impact: Anysphere offers an AI-powered coding assistant, enhancing software development efficiency.

[i] https://www.thomsonreuters.com/en/press-releases/2023/august/thomson-reuters-completes-acquisition-of-casetext-inc.html

[ii] https://www.reuters.com/technology/artificial-intelligence/openai-chairs-ai-startup-sierra-gets-45-bln-valuation-latest-funding-round-2024-10-28/

[iii] https://techcrunch.com/2024/08/09/anysphere-a-github-copilot-rival-has-raised-60m-series-a-at-400m-valuation-from-a16z-thrive-sources-say/

The substantial revenue growth, investments, and funding rounds highlight the increasing importance and influence of AI across sectors.

Industry Segments and Impact Summary

  1. Chipmakers: Continued exponential revenue growth (of even 100% yoy on a large base).
  2. Cloud Service Providers: Integrating AI across platforms, transforming business solutions (healthy revenue growth of 20-35% yoy even on a large base though not attributed fully to AI).
  3. LLM Model Developers: Valuation multiples of 42 times for OpenAI but not surprising given the traction & future potential.
  4. Tech Stack Providers: Extremely high Valuation multiples of Cohere and Perplexity (100+ based on current ARR). Seem to be bets / investments to build future technologies.
  5. Industry/Functional AI Applications: Revolutionizing specific industries, from legal tech to customer service. Again extremely high valuation multiples (100+ based on current ARR) for CaseText and Sierra AI. Cursor AI saw a sudden jump in ARR that justifies it previous valuation.
  6. Vector Databases: Facilitating contextual AI learning with innovative storage solutions. Again some high valuation multiples (in the 100 region) here that seem to be based on future potential and latching onto category creators in emerging categories.
  7. Your business: ?

Takeaway for your business

Industry adopters of AI may first see productivity improvement from adoption and disruption in customer experiences from new entrants adopting AI more aggressively. Impact on current business models may be visible more slowly and not evenly across industries.  This graphic from CIO.com seems to echo a similar picture.

Startups building on Generative AI need to develop deep vertical industry specific or function specific applications to create a meaningful impact. Easy VC money or high valuation multiples are not the norm for Gen AI startups especially in the ASEAN region.

AI automation consultant

Case studies:

  1. Personalized marketing & responses in Automotive industry:

An automotive company quoted in this article by Mckinsey[i] used AI & Machine learning to recreate customer segments, develop a LLM driven personalized marketing & response mechanism with metrics being tracked throughout the customer interactions & journeys which lead to growth in customer satisfaction and better analytics & metrics available for sales & marketing decisions.

  1. Custom AI Tool for Tax Research:

BPM[ii] implemented a custom AI tool to expedite tax law and scenario research. This tool improves response times and optimizes resource utilization by providing insights in seconds across organization levels. It is trained on US federal tax publications to ensure precision and reliability.

  1. Use of AI for Job Matching:

Indeed[iii] leverages AI to enhance the speed, quality, and effectiveness of job matching processes. By using large language models (LLMs), the company customizes communication with job seekers, which significantly improves the job matching and hiring process.

  1. AI Integration in Software Development:

Globant[iv] utilized AI to optimize its software development processes. By integrating AI into the development lifecycle, Globant was able to automate repetitive tasks, reduce errors, and accelerate project timelines. This led to a significant increase in productivity and a reduction in time-to-market for their software products.

 

The role of AI is also expected to go beyond productivity improvements to accomplishing tasks or attempting to solve problems which were not even solvable before[v]. We have already seen 100% audits now possible in fraud detection and cyber security.

[i] https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/charting-a-path-to-the-data-and-ai-driven-enterprise-of-2030

[ii] https://www.cio.com/article/3541409/how-ai-is-transforming-business-today.html

 

[iii] https://www.cio.com/article/3541409/how-ai-is-transforming-business-today.html

 

[iv] https://www.cio.com/article/3541409/how-ai-is-transforming-business-today.html

 

[v] https://www.cio.com/article/3541409/how-ai-is-transforming-business-today.html

 

The Role of AI in Customer Engagement and Service

AI’s role in enhancing customer engagement and service is profound. From automating repetitive tasks to personalizing experiences, businesses are witnessing higher satisfaction rates and cost efficiencies. Engati’s conversational AI platform is one of the solutions that exemplify this transformation, empowering companies to engage with their customers more effectively and at a reduced cost.

Explore Engati’s conversational AI platform features at https://elevatespot.sg/saas/ . You can sign up for a free plan at https://elevatespot.sg/register/free/

Watch this Youtube video to view some of the features in action  https://youtu.be/ZoVBBhAXSDg

Try our search AI tools at https://elevatespot.sg/search-ai-tools/

Discover more from Elevatespot Pte Ltd

Subscribe now to keep reading and get access to the full archive.

Continue reading