Are investors focusing on AI? Well, that’s exactly where they are investing, according to reports.
Back in the day, Venture Capitalists would invest in Web 2.0 and social media or mobile apps, cloud computing and SaaS, fintech, e-commerce and direct-to-consumer businesses, crypto and blockchain, health and biotech, clean tech, ad tech and so on. But now, with the rise of AI, about 40% of the total amount raised by U.S. venture funds from the previous year has been focused on AI.
Several high-stakes investments have been taking place in AI mega-deals, which are deals with massive funding rounds, often greater than $100 million. These investments are strategic and typically target startups building foundational models, integrating into verticals, or involved in chips and infrastructure.
Not investing in AI means falling behind competitors across various dimensions such as efficiency, innovation, customer experience, and profitability. It can lead to the loss of competitive advantage and result in higher operational costs, slower decision-making, lack of innovation, poor customer experience, and cybersecurity vulnerabilities.
Investments have shifted significantly in 2025. Investors have become more cautious, and startups are finding it difficult to get acquired, as many investors are focusing solely on the AI space.
Markets are different today. With a new administration in the White House and the global economy being bullish, several companies have delayed planning their IPOs, hoping for lower taxes. But with the current tariff policies announced in early April and changes taking place, investors seem to be waiting. Still, AI investments remain very strong.
Some new platforms have emerged on the NASDAQ. For example, eToro and Hinge Health—a digital health company—are expected to go public soon. CoreWeave, an AI infrastructure provider, reported massive revenue growth in its earnings release right after going public, resulting in a surge in the company’s stock price.
Several larger players in AI, such as OpenAI, Perplexity, and Scale AI, are not in the IPO race yet.
Investing in AI-based projects usually involves billions of dollars due to the massive infrastructure required to support large-scale AI workloads.
With venture capital firms investing heavily into AI because of its long-term growth potential, there aren’t many investors showing interest—or even having the budget left—for investing in startups or markets outside of AI.
Smaller businesses are suffering due to this lack of investor interest. Many VCs and angel investors are playing defence in industries outside AI. And with the IPO and M&A markets remaining tight, there’s no clear path for investors to get their money back. As a result, they’re looking at industries that are already profitable and show strong growth potential. This is leaving many businesses in non-AI sectors unable to demonstrate solid revenue growth.
As far as investments are concerned, AI continues to dominate the landscape. That’s where is the future of innovation is headed. It looks like there seem to be incredible opportunities for growth and transformation in the field of AI. Entrepreneurs, investors, and businesses are focusing on adaptability and foresight that can help them align with the wave of this technological change. Several other entities and businesses are taking time to rethink and come up with strategies that will be relevant to the AI-first economy.