The first wave of AI markets has settled. Four years after GPT-3 made scaling laws impossible to ignore, investor and entrepreneur Elad Gil, early backer of Harvey, Perplexity, and Character.AI, argues that likely winners have emerged across several categories. Foundation model leaders are now Anthropic, Google, Meta, Microsoft, Mistral, OpenAI, and X.AI, with three or four of those capturing most benchmarks, most developer adoption, and most spend. LLM revenue has gone from zero to billions in roughly three years. Cloud AI spend at the major providers has hit several billion dollars per quarter.
The more interesting argument in the piece is structural, not just a list of winners. Gil explains why hyperscalers fund foundation model companies independent of investment returns: every dollar of AI adoption converts directly to cloud spend. That dynamic, Amazon behind Anthropic, Google behind Gemini, Microsoft behind OpenAI, shapes competition in ways that go beyond normal venture logic. He also draws a pointed historical parallel: Stripe launched a decade after PayPal and still won. Current leaders are not permanent.
The full piece goes deeper into which application-layer markets have also clarified, which remain murky, and where Gil sees the next wave forming. If you are allocating capital, building a company, or trying to understand why certain AI categories feel crowded while others feel wide open, the taxonomy he builds is worth reading in full.
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