The first half of 2023 was all about AI

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Wednesday 28 June 2023

This is the year of AI

The first half of 2023 has been a wild ride for the tech industry from Microsoft’s (MSFT) battle to acquire Activision Blizzard (ATVI) to Meta (META) CEO Mark Zuckerberg and Tesla (TSLA) CEO Elon Musks trying to throw their hands into the octagon. But the biggest story of the year so far is the explosion of interest in generative AI.

Companies across the business spectrum have jumped on the bandwagon, debuting AI-powered generative chatbots that can help you plan your vacations, AI assistants that organize business data, and AI services that can create images and videos.

The shares of AI-related companies have skyrocketed. Nvidia (NVDA), which designs the chips and software used to power artificial intelligence systems, is among the biggest winners, with the stock up 176% year-to-date. Enterprise AI company C3.ai (AI) is also basking in the glow of investor interest, with shares up 190% year-to-date.

However, big tech isn’t the only game in town when it comes to AI. According to Traci Gusher, data and analytics leader at EY in America, AI startups are generating a lot of interest from venture capitalists, despite a slowdown in overall VC spending.

OpenAI CEO Sam Altman arrives for a Senate Judiciary Subcommittee on Privacy, Technology and Artificial Intelligence legal hearing, Tuesday, May 16, 2023, on Capitol Hill in Washington.  (AP Photo/Patrick Semansky)

OpenAI CEO Sam Altman arrives for a Senate Judiciary Subcommittee on Privacy, Technology and Artificial Intelligence legal hearing, Tuesday, May 16, 2023, on Capitol Hill in Washington. (AP Photo/Patrick Semansky)

What we’ve seen is that this year alone, VC funding has increased nearly 7x in this space, and that’s against a market where venture capital is actually down 34% in the same time period, he explained. Gusher. The amount of money that is just being pumped into this is simply unprecedented.

But the AI ​​boom isn’t without its detractors, including some industry insiders who say the technology is too unpredictable and could have dire consequences for everything from jobs to human existence. The frenzy around artificial intelligence has gotten so strong that President Biden and members of Congress are debating potential ways to regulate the technology.

How did we get here? Let’s take a look back at the year in AI so far.

OpenAI, Microsoft and Google kick off an AI race

The AI ​​movement started in earnest in November 2022, when OpenAI unveiled its AI-powered generative chatbot ChatGPT. In just two months, according to UBS, the app reached 100 million monthly active users, outpacing TikTok, Instagram and Uber all the way to the finish line.

Microsoft, which has invested billions in OpenAI, struck next, unveiling a new version of its Bing search engine and Edge browser powered by OpenAI technology. Microsoft’s goal is to lure users away from Google’s search engine and Chrome web browser. According to the Windows maker, 1% market share in the search segment is worth about $2 billion in revenue.

Microsoft CEO Satya Nadella speaks during a keynote speech announcing the ChatGPT integration for Bing at Microsoft in Redmond, Washington February 7, 2023. - Microsoft's Bing search engine will integrate the powerful capabilities of GPT-based AI language, said CEO Satya Nadella, declaring what she called a new era for online search.  (Photo by Jason Redmond/AFP) (Photo by JASON REDMOND/AFP via Getty Images)

Microsoft CEO Satya Nadella speaks during a keynote speech announcing the ChatGPT integration for Bing on Feb. 7, 2023. (Photo by Jason Redmond/AFP) (Photo by JASON REDMOND/AFP via Getty Images)

Even Microsoft didn’t stop there. The company has added AI technologies to a number of different products, including security offerings, productivity suits, and data analytics software. The tech giant also debuted Azure AI Studio, which allows customers to build custom AI copilot apps. Shares of Microsoft are up 37% year-to-date.

In an effort to sidestep Microsoft, Google launched its Bard AI chatbot the day before Microsoft launched its Bing software. In May, Google announced a series of software updates including an experimental form of Google search called Search Generative Experience (SGE) that works similar to Microsoft’s Bing search engine.

Google also debuted generative AI capabilities for the Workspace productivity suit. The feature is currently available for trusted users. Google’s stock is up 34% year-to-date.

Meta, Amazon, and a host of other tech companies stepped in to announce their generative AI ambitions. Chip companies Nvidia and AMD (AMD) have also benefited heavily from the rise in AI, even as sales of traditional PC chips have plummeted from pandemic highs.

MOUNTAIN VIEW, CALIFORNIA - MAY 10, 2023: CEO Sundar Pichai speaks at the Google I/O Annual Developer Conference at the Shoreline Amphitheater in Mountain View, California on Wednesday, May 10, 2023. (Melina Mara/The Washington Post via Getty Images)

Sundar Pichai, CEO of Alphabet, speaks at the Google I/O annual developer conference on May 10, 2023. (Melina Mara/The Washington Post via Getty Images)

Nvidia may attract a lot of attention thanks to its dominance in the AI ​​chip space, but AMD’s shares also surged in the first half of the year, rising 69%.

Fear of an AI nightmare

Not all the news about generative AI has been positive. In March, a number of notable names in the AI ​​space, including Tesla CEO Elon Musk, signed an open letter from the Future of Life Institute calling for a 6-month moratorium on training AI systems more powerful than GPT-4.

In May, OpenAI CEO Sam Altman, Microsoft CTO Kevin Scott and Google DeepMind CEO Demis Hassabis signed a separate open letter from the Center for AI Safety saying mitigating AI’s extinction risk should be a global priority along with other catastrophes such as pandemics and nuclear war.

Altman has also appeared before Congress to discuss the need to regulate AI to prevent potential harm to society. President Biden, meanwhile, met with technology CEOs and critics of AI to discuss the need to responsibly develop technology.

U.S. President Joe Biden discusses his administration's commitment to seizing the opportunities and managing the risks of Artificial Intelligence, in San Francisco, California June 20, 2023. (Photo by ANDREW CABALLERO-REYNOLDS/AFP) (Photo by ANDREW CABALLERO -REYNOLDS/AFP via Getty Images)

On June 20, 2023, President Biden discusses his administration’s commitment to seizing the opportunities and managing the risks of AI. (Photo by ANDREW CABALLERO-REYNOLDS/AFP) (Photo by ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)

While fears that AI poses an existential threat grab the headlines, AI also poses a more immediate danger due to its ability to spread disinformation and disinformation. In May, an AI-generated image showing an explosion near the Pentagon briefly plunged stocks before the Pentagon confirmed the photo was a fake.

AI dominates the rest of the year

So will AI continue to be the talk of Wall Street and Silicon Valley in the second half of the year? Experts say it’s more than likely. This is because, unlike other technologies, artificial intelligence is something with practical applications that can improve efficiency in companies and, more generally, in people’s lives.

I think it will absolutely dominate the conversation for the rest of this year and for years to come, Gusher said.

Organizations need to think about this with a frame of mind that Generative AI is ready for my business, but is my business ready for Generative AI?

And those companies that understand how to best implement AI will have a distinct advantage, said Erick Brethenoux, distinguished analyst VP at Gartner.

The companies that I see that have leveraged AI techniques the most are companies that are adopting what we call an AI mindset. They won’t use AI for every project they do, but they did ask the question: Can AI help here?

Daniel Howley is the technical editor of Yahoo Finance. Follow him @DanielHowley

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