What a difference a year makes. 2022 marked the steepest stock market downturn since 2008. Fast-forward six months, and the major market indexes are all in the plus column, having each gained more than 20% from their respective bottoms. This suggests the onset of the next bull market, at least according to this one measure.
Yet there are still many questions about the state of the economy, the possibility of more interest rate hikes, and the potential for a mild recession. With all of that uncertainty, what's driving the market higher is expectations for runaway growth in technology stocks, fueled by the accelerating adoption of artificial intelligence (AI). It might be fair to say that 2023 is the year AI came of age.
It's not just everyday investors who have the bug. Billionaires, musical artists, and tech companies are all climbing aboard the AI train -- and one start-up, in particular, is attracting a lot of attention.
Image source: Getty Images.
Some of the biggest names in tech -- and music
Inflection AI is working to build a new kind of AI-powered digital assistant and has generated a lot of interest this year. The company was co-founded early last year by Reid Hoffman, co-founder of LinkedIn (now owned by Microsoft (MSFT +1.03%)); Mustafa Suleyman, co-founder of influential AI research company DeepMind (now owned by Alphabet); and Karén Simonyan, computer scientist and AI researcher at DeepMind. Inflection AI took its name as a nod to the fact that AI appears to be at an inflection point.
The company has attracted some of the biggest name in technology. In addition to its founders, who are among the most well-respected leaders in the field of AI, Inflection AI has attracted support and funding from a number of household names.
In its latest funding round, the start-up attracted additional financing from Hoffman, as well as from Microsoft and co-founder Bill Gates, Nvidia (NVDA +4.39%), and former Google CEO Eric Schmidt. Early investors include Meta Platforms' former chief technology officer Mike Schroepfer, musical artist and founding member of the Black Eyed Peas Will.i.am, and DeepMind CEO Demis Hassabis.
The company raised $1.3 billion in cash and cloud computing credits, bringing the total to $1.525 billion. The latest deal values the company at roughly $4 billion. This marks the second-largest funding for an AI start-up this year. No. 1 was OpenAI, which arguably helped AI become mainstream. Microsoft has reportedly invested a total of $13 billion in the company.
NASDAQ: MSFT
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Why it's attracting all this attention -- and money
Inflection AI has developed a new kind of conversational AI chatbot dubbed Pi, short for "personal intelligence," which debuted in May. Rather than focus on merely searching for information -- like OpenAI's ChatGPT -- Pi is a "personal AI, designed to be supportive, smart, and there for you anytime," according to Inflection's website.
Not only will the chatbot answer questions, provide ideas, and help make plans, but it also allows users to "vent ... [and] talk it over in a kind and compassionate way." Pi is meant primarily for conversation and interaction, rather than creating original content or coding -- ChatGPT's strong suits. "Pi is a teacher, coach, confidante, creative partner, and sounding board," Inflection said in a press release.
Inflection AI has partnered with Nvidia and cloud provider CoreWeave to harness the computational horsepower of Nvidia's graphics processing units (GPUs), which is the industry standard for accelerating AI workloads. The collaborators are "building the largest AI cluster in the world, comprising 22,000 Nvidia H100 Tensor Core GPUs."
For context, the H100 is Nvidia's gold standard data center AI processor and is reportedly nine times faster for training AI models and 30 time faster for inference -- the process of using these AI systems once they're trained. Nvidia and Microsoft are also acting as mentors to the AI start-up, "turbo-charging" Inflection AI's progress, according to CEO and investor Mustafa Suleyman.
NASDAQ: NVDA
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How investors can get in on Inflection AI
In an investor event in late May, Bill Gates was excited about the coming development of a "personal agent," an AI designed to help users. "Whoever wins the personal agent, that's the big thing, because you will never go to a search site again, you will never go to a productivity site, you'll never go to Amazon again," he said. Gates went on to say chances were 50-50 whether such a personal agent would be developed by big tech or a start-up.
For those looking to get in on the action, you won't be able to invest in Inflection AI, at least not directly. As a start-up, the company is only accepting funding from large companies and wealthy investors -- but take heart. Investors can acquire a stake in Inflection indirectly by investing in Nvidia or Microsoft, though it isn't immediately clear which company owns the larger stake.
To be clear, it will be some time before we know which of the coming chatbots will ultimately prevail, though there will likely be more than one. "I'd be disappointed if Microsoft didn't come in there," Gates said. "But I'm impressed with a couple of start-ups, including Inflection."
