The AI industry is hot right now. That’s not news. But there’s a constant flow of news reinforcing how breathtakingly hot it is. On June 22, AI chip behemoth Nvidia announced a record-setting Q1 revenue of $26 billion. That’s 18% more than it made in the previous quarter and a staggering 262% more than in Q1 2023. 

That same day, brought insights on how keen the ultra-wealthy are to pour money into AI when UBS released its annual Global Family Office survey. Though small operations with usually 10 staffers or less, these organizations move huge amounts of money for the wealthiest families in the world. Among the 320 family offices surveyed, the average net worth was $2.6 billion—representing a total $600 billion in investment potential.

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And AI is a growing part of these portfolios, with 78% percent of family offices worldwide (and 83% in the U.S.) saying they are likely to invest in the next two to three years. That makes it the most-popular sector, with the other top six also in technologies such as automation, medical devices, and “green tech.” (The survey does not reveal the actual dollar amounts that are or may be invested in sectors, just the level of interest in them.

UBS breakdown of most popular family office investments
UBS breakdown of most popular future investment areas for family office investments. Credit UBS

“It’s eight in 10. That’s pretty much everybody,” said Jennifer Gabrielli, head of the Ultra High Net Worth Solutions Group at UBS Wealth Management Americas. “There’s a heavy concentration of U.S. investment opportunity in that space.”

She believes that as the number of family offices grows, “they’re going to increasingly be a leading indicator of what other investors are thinking, both ultra-high net worth investors, and probably high net worth investors.”

Industry Shakeout May Be Coming

However, some cooling off may be coming, says Ravi Mhatre, co-founder and managing director at Lightspeed Venture Partners, one of the leading Silicon Valley VC firms. At the Milken Global Conference, he explained to Worth the challenges of making AI with development costs being so high. 

“We’re really in a peak moment where a lot of capital’s being thrown at the problem [of]  training models. We will go into some—I don’t know if it will be a trough of disillusionment—but some period where we taper down,” he said. There could be a shakeout as giant players and startups jockey for success. “How should companies go from the foundation models to the enabling infrastructure to ultimately the applications?” Mhatre asked. “How should that happen in a way where value’s going to get created for the companies building [this tech]?”

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