Artificial intelligence will undoubtedly change many things in our world in the long term. But for now, we may be experiencing an AI bubble.
Those looking for evidence of this can point to news that Cognition Labs is seeking a $2 billion valuation as reported through Wall Street Journal on Saturday.
Founded in November, Cognition Labs produces Devin, which describes how “the first fully autonomous artificial intelligence software engineer.” It brought no real income. This launched Devin this month.
Earlier this year, the startup raised $21 million in a deal worth $350 million. The company then rejected offers valuing it at $1 billion. Now, according to Magazinehe is in talks with investors about a deal that would be worth up to $2 billion.
This is a staggering number for a new venture. But in today’s world of artificial intelligence, this is not so shocking. Perplexity, an artificial intelligence search startup challenging Google, received funding a few weeks ago valuing it at $1 billion, up from $520 million a few months earlier, with Amazon founder Jeff Bezos among its backers. Mistral, a French artificial intelligence startup founded just over a year ago, has achieved success. $2 billion valuation December.
“Every bubble has a compelling story”
Each of these startups may well justify their lofty valuations. But as more and more AI businesses raise incredibly large sums from investors betting, the sense of a bubble is growing for some observers.
Albert Edwards, chief global strategist at Société Générale, is among the skeptics.
“Every bubble has a compelling story,” he wrote in a note this week. “The current story is centered on the expectation that corporate profits will soar, driven by artificial intelligence, to fully justify current sky-high valuations. Those of us who lived through the late 1990s [tech] The bubble has already heard all this and rolls its eyes to the sky.”
As for Devin, “many companies are working on some variation of this idea,” venture capitalist David Sachs noted in a recent report. episode belonging Universal Podcast. While he likes the agent-first approach to building new software projects, “I think it gets a lot more complex and complicated when you’re working with existing code bases,” a problem that other AI startups are tackling.
One of Devin’s advantages, he added, is that “he will showcase very well.”
Of course, it remains to be seen whether the cool demos that wow investors today will turn into thriving companies years from now. Either way, today’s stunning valuations for unproven startups are likely to be remembered.