PitchBook News - The rush for AI chips

Tech giants cannot get enough of customized AI semiconductors in their data centers, nor can the startups creating the future of AI models.

We have documented the non-linear positive relationship between additional computing resources and AI model quality over the past four years that drove the AI GPU market to reach $5.5 billion in 2022.

With the breakthrough in model quality from ChatGPT, cloud buyers and AI research labs accelerated their capital expenditure plans, spurring Nvidia to increase its revenue guidance above expectations by 55.5%, or $3.9 billion, for Q2 2023.

Even so, Nvidia does not own the entire AI value chain and VC investors have already begun shifting their focus to categories in which startups can carve out market share. Hyperscalers' custom chips and startups can outperform the chip giant on specific inference tasks that will increase in importance as large language models are rolled out from cloud data centers to customer environments.

 

Our note details the use cases and architectures driving neural network processor adoption.

We've launched analyst coverage of the enterprise SaaS vertical with a massive 5,000+ company segmentation across six major segments of enterprise solutions.

Drawing from our ~3.6 million company profiles, we find that enterprise SaaS venture deal activity and deal value have steadily decreased from recent highs in 2021 and 2022, with Q1 2023 representing a further overall softening of investments.

Bucking the trend are large multimillion- and multibillion-dollar deals for venture-growth-stage companies, especially unicorns and decacorns.

Alongside our detailed taxonomy (six segments, 23 subsegments), we have market projections through 2027, envisioning the global enterprise software market to grow from $292 billion in 2022 to $522 billion in 2027.

 

Click to access a free preview of our Enterprise SaaS Report.

We expect enterprises will continue to transition from on-premise to SaaS and cloud-based deployments, creating opportunities for meaningful connected strategies with customers while also providing greater revenue continuity for vendors. Additionally, the integration of AI and intelligent automation represents a key next-gen driver of future growth and disruption.