Investors are still ready to whip out their wallets for AI startups, though there are some signs of possible growing pains ahead for the generative AI craze.

A report from Crunchbase this week found that the number of deals and amount of funding being poured into AI remained robust in the first quarter of 2024, despite fewer eye-popping cash infusions overall than during parts of last year.

Venture capitalists sank a total of $12.2 billion into AI-related startups across 1,166 deals in the first three months of the year, a 4% uptick in total funding and a 9% increase in deals from the previous quarter. While total investment was down about 25% YoY, Chris Metinko, the report’s author, noted that Microsoft’s monster $10 billion check to OpenAI last January skewed the scales a bit.

Fewer headliners: Those kinds of blockbuster cash infusions may be growing fewer and further between. The report noted that the quarter saw only one billion-dollar-plus deal (the Chinese startup Moonshot AI) and only two others that surpassed $600 million (California-based humanoid robot startup Figure and China-based AI media startup MiniMax).

“While that is still impressive, it seemed like such rounds were being raised every week by an AI startup just last summer as the sector saw some of the biggest raises of 2023,” Metinko wrote.

Keep reading here.—PK

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Microsoft and Google are proving there’s money to be made in generative AI—at least when there are cloud services to sell along with it.

While investors may be growing impatient with Mark Zuckerberg’s far-sighted AI dreams, things looked rosier for other competitors in the Big Tech AI race in the last quarter. Google and Microsoft both posted better-than-expected results, aided by strong growth in demand for their respective cloud computing businesses.

Both companies continue to spend an increasing amount on data center infrastructure and chips to support AI, and Google helped soothe investors by announcing its first-ever cash dividend. Microsoft, meanwhile, seems to be proving it can earn returns on this spending both in the cloud and on its Copilot software.

Copilot’s seat: Microsoft said its Azure cloud services grew 31% in its fiscal third quarter, fueled in part by companies building AI tools on top of it.

“Azure has become a port of call for pretty much anybody who is doing any AI project,” CEO Satya Nadella said during an earnings call. “And so that’s sort of been a significant help for us in terms of acquiring even new customers.”

Keep reading here.—PK

The majority of professional software engineers will be using AI assistants by 2028, Gartner projects—but tech execs expecting massive increases in productivity are likely to be disappointed.

According to Gartner, while under 10% of software devs were using such assistants in early 2023, another survey in late 2023 showed 63% of organizations were piloting or deploying them. By 2028, the consulting firm expects three out of four devs to be using AI assistants regularly on the job.

“You see the jump,” Philip Walsh, a senior analyst in Gartner’s software engineering practice, told IT Brew.

The number of devs using AI assistants had already risen from under 10% in early 2023 to 18% by October, Walsh said, and an additional three-fifths of respondents reported their organization was planning, piloting, or deploying AI tools. That said, he cautioned productivity gains in practice might be modest, even if some of the most optimistic projections—like time savings of up to 50% on some tasks—are correct.

“It’s very difficult to turn time saved into time reapplied,” Walsh said. “With an AI code assistant, the time savings are coming in five, 10, 15, 20-minute increments…If time savings don’t come in a certain large enough threshold, your developers aren’t going to immediately just launch into the next ticket in the backlog.”

Keep reading here.—TM

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