Artificial intelligence will undoubtedly change lots about our world in the long run. But immediately we could also be living in an AI bubble.
Those searching for evidence of this might point to the news that Cognition Labs is searching for a $2 billion valuation reported until Wall Street Journal on Saturday.
Cognition Labs was founded in November and makes Devin describes as the “first fully autonomous AI software developer.” No real revenue was generated. It began Devin this month.
Earlier this 12 months, the startup raised $21 million in a deal value $350 million. It subsequently rejected offers value $1 billion. Well, in line with the diaryThe company is currently negotiating with investors on a deal that will be value as much as $2 billion.
That’s a tremendous number for a brand new company. But in today’s AI space, none of that is so shocking. Perplexity, an AI search startup difficult Google, secured $1 billion in funding just a few weeks ago, up from $520 million just a few months earlier, with Amazon founder Jeff Bezos among the many backers . Mistral, a French AI startup founded just over a 12 months ago, has achieved success Valuation of $2 billion In December.
“Every bubble has a compelling narrative”
Each of those startups could actually justify their high valuations. But as increasingly AI corporations raise improbably large sums of cash from investors who diversify their stakes, the sensation of a bubble is increasing amongst some observers.
Albert Edwards, chief global strategist at Société Générale, is among the many skeptics.
“Every bubble has a compelling narrative,” he wrote in a note this week. “The current narrative focuses on expectations of an AI-driven rise in corporate earnings to fully justify current stratospheric valuations. Those of us who lived through the late 1990s [tech] Bubble has heard it all before and rolls his eyes skyward.”
As for Devin, “Many companies are working on a variation of this idea,” noted enterprise capitalist David Sacks in a recent report Consequence of All-In Podcast. While he likes the corporate’s “agent-first approach” to generating recent software projects, “I think it gets a lot harder and harder when you’re working with existing code bases,” a challenge that other AI startups are also taking over.
One advantage of Devin, he added, is that it would “demonstrate really well.”
Of course, it stays to be seen whether cool demos that excite investors today may also be translated into thriving corporations in the long run. Either way, today’s stunning valuations for untested startups will likely be remembered.
