Second AI wave is making b’naires of some unlikely candidates

The AI boom has led to a wave of sky-high valuations for companies that managed to be among the first out of the gate. Anthropic is nearing a USD 1 tn valuation on the back of its most recent funding round, overtaking OpenAI which was worth around USD 852 bn in March.

More recently, it’s the second wave of AI firms that’s increasingly garnering more investment attention and making b’naires of their founders, Bloomberg reports. Last year saw US AI startups yield 19 new b’naires, who together have a combined net worth of USD 59.3 bn.

The difference: While the so-called first wave of AI startups was mainly focused on products and sectors directly linked to the AI boom — think semiconductors, data centers, and LLMs — the next generation is targeting more applied uses for AI within existing industries. Newer firms are increasingly looking to automate processes in the law, med., coding, and audio-visual sectors.

Who’s on the list? Topping the list with a USD 60.2 bn valuation is Cerebras Systems, making b’naires of its founders Andrew Feldman (worth USD 2.8 bn) and Sean Lie (USD 1.5 bn). (Remember: Cerebras is a credible Nvidia alternative with wafer-scale chips, with a major UAE client base). Open-weight AI model developer Reflection’s USD 27 valuation has made its founders worth USD 4 bn each, while customer service software firm Sierra’s founders are worth USD 4.2 bn and USD 3.7 bn. OpenEvidence, an AI assistant for doctors, has made its founder Daniel Nadler — who’s also a published poet — worth USD 7.2 bn.

BUT- This might not remain the case for long, with longtime sector heavyweights like OpenAI and Anthropic also looking at expanding their offering to encompass tasks newer players are working on, and pulling in significant chunks of investor funds and attention through capital raises and upcoming public listings.

Some see a shakeout in the cards: Hedgeye’s Felix Wang sees the investment-intensive AI infrastructure segment as particularly likely to see a restructuring. Smaller players are likely to benefit from their more targeted scope and the room for innovation, however, protecting them from bubble territory, he says.

MARKETS THIS MORNING-

South Korea’s Kospi hit a fresh high in early trading this morning, gaining over 3.2% as optimism over the future of AI offsets the uncertainty around the regional war and still-stalled ceasefire negotiations. Japan’s Nikkei is up a more modest 1.3%. US equities are set to start off the week higher, with futures in the green.

THE CLOSING BELL-

The EGX30 fell 0.4% at last Monday’s close on turnover of EGP 9.9 bn (24.1% above the 90-day average). Local investors were the sole net buyers. The index is up 25.9% YTD.

In the green: Palm Hills Developments (+5.9%), Orascom Construction (+3.5%), and GB Corp (+2.8%).

In the red: Raya Holding (-2.2%), CIB (-2.2%), and Egypt Aluminum (-2.2%).