 "Technology, Startups, Space startup, Food delivery")
Over the past 12 months, 10 loss-making artificial intelligence (AI) startups have seen their combined valuations soar to nearly $1 trillion, according to a report by Financial Times. This unprecedented surge has raised concerns about a potential bubble in private markets, with risks that could spill over into the wider economy.
OpenAI, Anthropic and Elon Musk’s xAI have had repeated valuation increases amid a rush to back young AI companies. Smaller firms developing AI applications have also seen huge jumps, while established startups like Databricks have gained massively after adopting AI technologies, the news report said.
Citing data from PitchBook, the news report said that US venture capitalists have invested $161 billion in AI so far this year, which is around two-thirds of their total spending. The bulk of this funding has gone to just ten firms: OpenAI, Anthropic, xAI, Perplexity, Anysphere, Scale AI, Safe Superintelligence, Thinking Machines Lab, Figure AI and Databricks, pushing their combined value close to $1 trillion.
'Bubbles are good'
Hemant Taneja, CEO of venture capital firm General Catalyst, which raised $8 billion last year and invests in companies like Anthropic and Mistral, acknowledged that the market is experiencing a bubble. The news report quoted him as saying that such "bubbles are good", as they bring together investment and talent around emerging trends.
Also Read
 "a")
 "Weighing 160 kg, Mission Drishti is India's largest privately built satellite India's largest privately built satellite")
 "RPS")
 "startup funding investment")
 "Startups face I-T department heat over funding through Singapore")
While they may cause short-term disruption, he added, they also help build lasting businesses that can transform industries.
Investors chasing FOMO?
Investors are betting AI will create multiple multi trillion-dollar markets, from automated software engineering to AI companionship. Yet, there are concerns that valuations are unrealistic. Startups with $5 million in annual recurring revenue are seeking valuations above $500 million, a senior Silicon Valley venture capital (VC) noted.
Sam Altman, OpenAI’s CEO, has argued that building artificial general intelligence (AGI), AI capable of performing all economically valuable human tasks, will generate huge benefits, even if some capital is misallocated.
Risks for public markets
Private AI startups now influence public markets. Shares in AMD, Nvidia, Broadcom and Oracle surged after deals to provide computing power to OpenAI. If questions arise about these startups’ ability to pay, those gains could reverse, the news report said.
Three years after releasing ChatGPT, OpenAI has $13 billion in annualised revenue. Yet competition with giants such as Meta and Google makes the path to profitability longer. Chipmaker deals, like VC investments, are bets on AI’s continued growth, driven by research breakthroughs and new products, the Financial Times reported.
 "video streaming, ott, online tv, over the top, content, web series, web show")
 "Electricity Meter, Electricity Bill")
 "Indian market, Diwali, lights, economy")
 "real estate, realty firms")
 "The stock of the second-largest electronic manufacturing services (EMS) player by market capitalisation, Kaynes Technology India, is up 10 per cent from its monthly lows. This was on better than expected June quarter performance, strong order flows a")
