AI Start-ups Are Rolling in Cash
Investors are plowing record sums of money into artificial intelligence start-ups. Even as sales grow swiftly, losses are piling up for AI firms.

To help you understand what is going on in business, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…
Investors can’t get enough of AI start-ups. A record $70 billion was doled out to generative AI companies by venture capital firms and other investors in the first half of 2025, according to a recent report by S&P Global Market Intelligence. The total was driven by two megadeals: OpenAI’s $40 billion funding round and Meta’s $14.8 billion minority stake in Scale AI.
The eye-popping total highlights the heated competition among leading AI firms and the big expectations investors have for future paydays.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The U.S. is by far the global leader, with nearly $40 billion invested over 728 deals in the second quarter, making up 84% of the global dollars, according to market research firm CB Insights. The median deal size is $4.6 million, a four-year high.
Much of the money is used for buying Nvidia-based computing power. Large players such as OpenAI, xAI and Europe’s Mistral AI are increasingly looking to build or expand their own data centers so they don’t have to rely on cloud computing from Amazon, Microsoft or other cloud vendors.
Look for more small players to get scooped up by leading tech giants and other large companies. Banks, consulting firms and other businesses want AI tech, too, and a quick way to get it is to buy a promising start-up.
AI is clearly flying high, so what could go wrong? “Competition in the space is expensive, and although revenue is increasing rapidly, losses are also mounting, requiring more investor funding,” notes S&P Global Market Intelligence’s report. Plus, investor skepticism is starting to emerge. “At the start of the third quarter in July, xAI secured $10 billion through debt and equity, but the company had to pay a steep interest rate on the debt.”
Expect plenty of start-ups to fail to gain traction and some to eventually go under. The hot market is also crowding out investment in anything that’s not AI-related, potentially spurring a glut of AI start-ups while disregarding other promising tech.
Still, some of the start-ups are already gaining serious traction. Others are sure to soar in the years ahead. The top tech deals in the second quarter were by Scale, xAI, Anduril, Thinking Machines Lab and Anysphere, according to CB Insights.
Anthropic, a leading AI company, is in talks to raise another $10 billion in funding, according to recent reports. Other firms scoring funding this year: Seekr Technologies, Snorkel AI, TensorWave, Decagon, Chainguard, Glean, Harvey, Cyera, Abridge, Ramp and Cyberhaven. The U.S. has an astounding 206 private AI firms valued at more than $1 billion, says CB Insights.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Related Content
- AI Start-ups Keep Scoring Huge Sums
- What Are AI Agents and What Can They Do for You?
- Blue Collar Workers Add AI to Their Toolboxes
- From Chatbots to Audits: How the IRS Will Use AI
- Can AI Help With Your Finances?
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

John Miley is a Senior Associate Editor at The Kiplinger Letter. He mainly covers technology, telecom and education, but will jump on other important business topics as needed. In his role, he provides timely forecasts about emerging technologies, business trends and government regulations. He also edits stories for the weekly publication and has written and edited e-mail newsletters.
He joined Kiplinger in August 2010 as a reporter for Kiplinger's Personal Finance magazine, where he wrote stories, fact-checked articles and researched investing data. After two years at the magazine, he moved to the Letter, where he has been for the last decade. He holds a BA from Bates College and a master’s degree in magazine journalism from Northwestern University, where he specialized in business reporting. An avid runner and a former decathlete, he has written about fitness and competed in triathlons.
-
Solo vs Group Travel: What's Best for Retirees?
Travel isn’t a one-size-fits-all choice. Solo and group travel serve different needs, with many retirees preferring one or the other, or a combination of both.
-
Five Wealth-Building Moves You Can Make in Retirement
Here's a look at five ways to build wealth in retirement. Who says you can't make a bundle once you've retired?
-
What is AI Worth to the Economy?
The Letter Spending on AI is already boosting GDP, but will the massive outlays being poured into the technology deliver faster economic growth in the long run?
-
9 Warren Buffett Quotes for Investors to Live By
Warren Buffett transformed Berkshire Hathaway from a struggling textile firm to a sprawling conglomerate and investment vehicle. Here's how he did it.
-
S&P 500 Tops 6,500 Even as Nvidia Slips: Stock Market Today
The world's most valuable company closed lower after earnings, but the S&P 500 managed to notch a new record high.
-
Stocks Edge Higher With Nvidia, Fed in Focus: Stock Market Today
The AI bellwether reports earnings after today's close, while Wall Street is keeping a cautious eye on President Trump's attacks against the Fed.
-
Are There Opportunities to Invest in China?
Opportunities to invest in China are plentiful and, arguably, shouldn't be ignored in the U.S. Here's where to look.
-
The Future of Financial Advice Is Human: Gen Z Trusts Advisers, But AI Skills Matter
Graduates entering the workforce trust human advisers more than AI tools with their financial planning. But AI can still enhance the client/adviser relationship.
-
President Trump Makes Markets Move Again: Stock Market Today
The White House is moving ahead with plans to reshape the Federal Reserve and to buy shares in more sectors and stocks.
-
Stocks Struggle to Start Nvidia Week: Stock Market Today
Another important week for the stock market starts on a risk-off note.