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US Leads World on Gen AI Investment, Innovation and Implementation

Why Companies Must Take AI Implications Seriously

When it comes to the innovation, investment and implementation of disruptive artificial intelligence (AI) products and research, the United States leads the rest of the global pack.

That’s according to a newly released report from venture capital firm Air Street Capital. The “State of AI Report 2023” showed that over 70% of the AI papers cited most since 2020 are authored by researchers from institutions and organizations in the U.S.

Big Tech giants Google and Meta held the greatest percentage of cited AI research papers, while China’s only entrant on the list, Beijing’s Tsinghua University, fell just outside of the top 10 at No. 11.

What’s more, AI companies based in the U.S. were also the recipients of 70% of global private funding in 2023, up from 55% in 2022.

The dry powder being ignited by European Union AI companies in 2023 charted in the opposite direction, with rates of injected capital falling off by more than 70% year over year.

China maintained its second-place position in nearly every category the report measured, while the United Kingdom, Singapore and Canada all proved to be dark horses in the global AI race, as did South Korea and Israel.

Still, the U.S. and China are far ahead of their global peers, and the EU’s 27-nation member bloc has not made much progress on AI as a whole — outside of being the first major market economy to draft a policy framework regulating the technology, the EU AI Act.

Read also: Calls to Pause AI Development Miss the Point of Innovation

Artificial Intelligence Promises to Reshape Nearly Every Industry

The demand for AI products is increasing across virtually every sector. However, enterprise software, transportation, FinTech and healthcare are the AI categories around the world seeing the most investment, per the report. Areas like robotics, security and energy are also gaining traction.

China, for its part, has installed the most industrial robots across its warehouses, factories and other manufacturing sites when compared to its international peers.

The burgeoning AI sector’s opportunities — and valuations — have captured the attention and investments of the VC industry, with 24% of all corporate VC investments going to AI firms in 2023.

Stanford University’s “AI Index Annual Report” found that in 2022, the U.S. led all regions with the largest number of newly funded AI companies at 542, followed by China at 160 and the U.K. at 99. Over the past decade, America’s proportional lead has remained relatively steady compared to its global peers.

But it isn’t just AI startups that are finding themselves flush with cash to spend on next-generation innovations; some of the biggest and most valuable companies in the world are cutting themselves checks, too.

Apple, which has fallen behind its software-focused Big Tech peers in the AI race, is reportedly planning to invest up to $1 billion a year to play catch up with generative AI.

As a percent of total company capital expenditures, Microsoft is spending just under 14% on AI, twice as much as both Google and Meta, and nearly four times as much as IBM and Amazon Web Services (AWS).

Still, compared to the most popular incumbent tech apps and platforms, including YouTube, Instagram, TikTok and others, generative AI platforms themselves suffer from lower median retention and daily active users, the report found, although it is likely that the social apps are using AI in some way to increase the behavioral engagement of their own user audiences.

See also: How AI Regulation Could Shape Three Digital Empires

The State of Innovation Around the World

While censorship, geopolitical tensions and the government’s growing control of the private sector have made China less friendly to innovation than other major markets, the country’s own tech industry coincidentally holds the most active AI and machine learning patents.

Chinese tech giant Tencent and search engine Baidu lead the AI patent pack, ahead of IBM and former patent leader Microsoft, as well as South Korea’s Samsung.

Regulation will be crucial to support further innovation in AI, and the EU and China are leading the pack in passing new legislation specific to AI, with the EU favoring a sliding scale of risk-based obligations and China favoring a state-controlled approach.

The U.S. is unlikely to pass an AI law anytime soon, and for now is focusing mainly on voluntary commitments and research at a federal level, although some states like California and others are moving forward with their own individual laws.

On Tuesday (Oct. 24) 21 AI leaders are descending on Washington, D.C., for the second Senate AI Insight Forum, which will focus on “transformational innovation — the kind of innovation that creates new vistas, unlocks new cures, improves education, protects our food supply, protects our national security — but also to sustainable innovation, which is the kind of guardrails needed to prevent the negatives in AI, necessary to prevent against AI’s risks and minimize the chance that this technology becomes unmanageable or worse.”

The creation of a supranational, global regulatory body has also been promoted from various corners of the globe, including most recently by former Google CEO Eric Schmidt, along with Inflection and DeepMind Co-founder and AI-pioneer Mustafa Suleyman.

The U.K. is hosting a global summit centered around AI safety and governance Nov. 1 and 2, where nations and AI leaders will gather to share their thoughts on how best to push forward.

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