The Artificial Intelligence Gold Rush

Artificial intelligence (AI) has been around for a long time and people are still waiting for the first C-3PO (a talking robot from Star Trek) to be released. Looking at the money big tech companies and venture capitalists are pouring into the sector, AI is making huge progress, although the investors are looking for different things than a talking robot.

“In the long run, I think we will evolve in computing from a mobile-first to an AI-first world. And I do think we’re at the forefront of developments,” said Sundar Pichai, CEO of Google, Inc. on an earnings call with investors in April.

Google is the most active investor in AI with 9 acquisitions completed since 2011.

“High-quality AI engineers are in very short supply, and majors who have fallen behind the AI race (Twitter, AOL, and dozens of others) see what Google is achieving and are scrambling not to be left behind,” stated Victor Basta, managing partner at Magister Advisors, a London-based specialist investment bank in a LinkedIn post.

Artificial intelligence is based on the assumption that a machine or a computer can be made to “stimulate” human intelligence. The term was first coined in 1956 when a group of American researchers came together at Dartmouth College to discuss how to program a computer so that it can act like a human.

Technological breakthroughs in recent years broadened the application of AI. It is now used in a wide range of fields including computer science, healthcare, finance, security, advertising, telecoms, transportation, and automotive.

Frank Chen, a partner at a Silicon Valley venture capital firm Andreessen Horowitz defines AI as “one of the biggest technology shifts that is happening in the industry.”

“We think artificial intelligence, and in particular, deep learning could be as profound and may be even bigger [than mobile and cloud],” Chen says in a video on Andreessen Horowitz‘s website.

The interest in AI soared due to innovations in machine learning and particularly in the area of deep learning. Deep learning creates knowledge from multiple layers of information processing and its applications can be found in functions like image recognition or speech recognition.

In recent years, U.S. tech giants realized the importance of AI for their services and started pouring money into startups. The pick-up in mergers and acquisitions began in 2014.

Tech giants including Google, Twitter, Salesforce, Apple, Intel, Yahoo, IBM, and AOL bought nearly 30 AI startups in the last five years, according to CB Insights. Five of the acquisitions happened in 2016.

One of the most notable deals was the acquisition of deep learning startup DNNresearch by Google in 2013 from the computer science department of the University of Toronto.