Tracking Gen AI revenue

$50B invested in 2023, $50B+ in revenue in 2023?

Why track Gen AI spending

The interest and investment in Generative AI are reminiscent of past investor euphoria. High optimism, a significant number of new companies, and high investment levels, are defining elements of how tech innovation is commercialized. Entrepreneurs and investors see the future, but need to time it effectively with market adoption.

Generative AI spend layers:

• Infrastructure - chips and components

• Platforms - Azure, GCP, AWS, etc

• Models - OpenAI, Anthropic, Cohere

• LLM Dev tools - Guardrails.ai, Weights & Biases, Pinecone, etc

• Application layers - Midjourney, ChatGPT+, GitHub Copilot, others

2023 Revenue Estimate

Numbers are based on direct reports, triangulating earnings calls, and news reports. Data here

A starting investigation shows the vast majority of the spend is in the infrastructure layer. In particular, NVIDIA’s datacenter revenue segment.

This is an underestimates every section. This is missing key companies and doesn’t reflect how incumbent applications are adopting Gen Ai. Specifically, internal use cases that drive sales cycle efficiency, and incorporating Gen AI into customer products, driving up ACV.

ServiceNow and AppFolio incorporate Gen AI directly into products

For example, ServiceNow reported, “the largest net new ACV contribution” thanks to Gen AI¹. AppFolio, introduced Generative AI into it’s property management software with Realm-X. Now “93% of [their customers] use one or more AI-enabled features”.²

$50B invested into Gen AI in 2023

Tracking where revenue is generated in Generative AI helps us understand adoption and potential investor returns. In 2023, PitchNook says there was nearly $50B³ invested into Generative AI.

The money being spent on generative AI roughly equals the money invested into generative AI⁴. I would have expected investment to exceed revenue, particularly in the first few years.

Open Source Tracking

I’m happy to open source tracking AI spend. If interested, please comment or reach out.

1. https://tomtunguz.com/now-earnings/

2. https://finance.yahoo.com/news/q4-2023-appfolio-inc-earnings-110031542.html

3. This includes investments from corporate venture capital that might come in the form of “GPU credits” as opposed to cash.

4. Again, GPU credits and revenue attribution are important to acknowledge here. I dont know the best way to get at it.