Inside the Eye-popping Numbers of 2024’s Hottest AI Firms

As the artificial intelligence gold rush continues, valuations have soared to dizzying heights. From generative AI models that can write codes to AI-driven search engines that promise smarter answers, U.S. AI startups are raking in billions from investors eager to bet on the next money-making technological revolution.

In Q3 2024, venture capitalists poured $3.9 billion into gen AI startups across 206 deals, $2.9 billion of which went to U.S.-based companies in 127 deals, according to PitchBook, (excluding OpenAI’s $6.6 billion funding round in October).  

Behind the eye-popping figures—some firms are now valued north of $10 billion—questions remain about whether these startups can sustain the hype, deliver on lofty promises, and justify their swelling price tags.

“Vanguard has hinted at a coming ‘correction,’ suggesting these valuations may be a touch too optimistic,” said Jeremy Goldman, sr. director of the marketing, retail, and tech briefings, Emarketer. “Investors are banking on constant innovation, but the road to AI dominance is paved with broken promises and beta tests.”

While AI firms are generating revenue, sky-high projections—like OpenAI’s $11.6 billion forecast for 2025—rest on the assumption of flawless execution and continuous innovation.

“Consumers have shown they’ll be willing to rely on imperfect products, but enterprises won’t necessarily pull the trigger on imperfect offerings,” said Goldman. Meanwhile, competition remains fierce, with OpenAI reportedly discouraging investors from backing rivals.

“In a world where tech dreams often collide with reality and regulators, expect a few hard landings [in 2025],” said Goldman. “The AI gold rush may yet prove fruitful, but some of these valuations are setting the stage for a very public reckoning.”

Here are some startups leading the charge—and the valuations that everyone is watching, (in price descending order).

OpenAI

Valuation: $157 billion (as of October 2024, per The New York Times)

Highlights: The world’s most highly valued AI startup is making strategic moves to secure its dominance. A $10 billion investment from Microsoft in 2023 fueled OpenAI’s rapid growth, anchored by its flagship model, ChatGPT, now integrated into Microsoft and Apple products. In 2024, OpenAI hired its first CMO and introduced ChatGPT as an AI-driven search tool, and started talking about an ad-based revenue model. ChatGPT surpassed 300 million weekly active users, OpenAI CEO Sam Altman said at DealBook Summit earlier this month. Ongoing legal battles and substantial operational costs are its core challenges heading into 2025.

Total capital raised: $17.6 billion (per Crunchbase)

xAI

Valuation: $40 billion (as of October 2024, per Bloomberg)

Highlights: Elon Musk’s xAI—a 2023 startup that develops a platform to accelerate human scientific discovery—raised $6 billion last week. This capital came from 97 investors, with stakes as small as $77,593, according to a recent SEC filing. The funds will partially support the construction of a supercomputer facility in Memphis. xAI’s flagship product is Grok, a chatbot integrated with social network X (formerly Twitter). Musk’s entry into the AI space has drawn significant attention, positioning xAI as a competitor to established AI giants like OpenAI.

Total capital raised: $6.4 billion (per Crunchbase)

Anthropic

Valuation: $40 billion (as of September 2024, per The Information)

Highlights: Anthropic distinguishes itself from other AI companies by prioritizing ethical considerations in its development process. A formidable OpenAI rival with its Claude series of models, Anthropic has emphasized safety and reliability by incorporating a methodology called Constitutional AI. This aims to create an AI capable of evaluating and guiding the behavior of other AI systems with minimal human oversight—relying instead on a set of rules or principles. Anthropic recently made headlines with Amazon’s $4 billion investment, bringing Amazon’s total investment to $12 billion over the past 14 months, further solidifying Anthropic as a key player in the AI landscape.

Total capital raised: $8.4 billion (per Crunchbase)

Scale AI

Valuation: Nearly $14 billion (as of May 2024, per Bloomberg)

Highlight: Founded in 2016, years before OpenAI’s ChatGPT brought artificial intelligence to the mainstream, Scale emerged as an early leader in the AI sector. It’s backed by tech giants like Meta and Amazon, raising $1 billion in 2024, one of the year’s largest financing deals. The startup relies on a large workforce of contract workers to clean and label the vast amounts of text, images, and data necessary for developing AI chatbots and other products. Additionally, Scale leverages reinforcement learning from human feedback, using insights from real users to continuously improve its AI performance. Legacy automakers like General Motors and Toyota, along with chipmaker Nvidia, have utilized its platform.

Total capital raised: $1.6 billion (per Crunchbase)

Perplexity

Valuation: $9 billion (as of November 2024, per CNBC)

Highlight: Perplexity, a buzzworthy AI search startup backed by Jeff Bezos, started the year with a roughly $500 million valuation and is now close to raising $500 million in new funding. Known for challenging search giant Google and OpenAI’s ChatGPT, Perplexity has also expanded into e-commerce. The app, which has over 2 million downloads and handles 230 million monthly queries (as of August), recently added publishers like the Los Angeles Times and The Independent to its revenue-sharing program. Perplexity pays publishers when ads generate revenue alongside their content. Brands like Whole Foods and Indeed are already testing ads on the platform. Meanwhile, The New York Times has demanded that Perplexity stop using content from its site in a cease and desist letter sent to the company.

Total capital raised: $99.2 million ( $73.6 million in Series B and $25.6 million in Series A, not including the current $500 million in new funding)

Inflection AI

Valuation: $4 billion (as of 2023, per TechCrunch)

Highlight: Inflection AI initially targeted the consumer AI space with its chatbot, Pi, designed as a supportive conversational assistant. However, after struggling to monetize the product, the company is now pivoting toward an enterprise focus, helping businesses work with large language models (LLMs). Meanwhile, tech giant Microsoft has agreed to pay Inflection $650 million for a software licensing deal. The company also recently appointed cofounder Mustafa Suleyman as head of its consumer AI division.

Total capital raised: $1.5 billion (per Crunchbase)