Uncovering the Wealth of Businesses in the AI Gold Rush

The American tech giant Nvidia is set to host a major event in San Jose on March 18th, bringing together companies from various layers of the AI “stack” to showcase the latest innovations in artificial intelligence. This event will highlight the fierce competition between firms within different layers of the stack.

In an analysis conducted by The Economist, four layers of the AI stack were examined: AI-powered applications, AI models, cloud-computing platforms, and hardware. The study found that value is increasingly concentrated in a few leading firms at each layer, with the biggest companies gaining a larger share of overall value created.

Nvidia, the host of the upcoming event, has emerged as the biggest victor in the hardware layer. The company controls a significant portion of the AI chip market and has seen tremendous growth in its data center business. In response, competitors like AMD and Intel are launching rival products, while cloud giants are developing their own chips to reduce reliance on Nvidia.

While hardware companies have seen the most significant absolute gains in value, independent model-makers have experienced the biggest proportional gains. Model-makers like OpenAI and Anthropic have seen their valuations soar, with the intellectual property they possess playing a crucial role in their future profitability.

Investors are bullish on the cloud giants – Alphabet, Amazon, and Microsoft – believing that these companies have the potential to control every layer of the AI stack, from chips to applications. The big tech firms are investing heavily in AI systems and partnering with model-makers and application developers to secure their position in the AI market.

Overall, the AI boom has created immense value for companies across the AI stack, with significant gains accruing to hardware manufacturers, model-makers, and cloud computing giants. As the competition in the AI space intensifies, companies are exploring new opportunities and alliances to capture value in this rapidly evolving industry.