Venture capitalist Tim Draper said investors searching for the next major artificial intelligence opportunity should look beyond leading model developers such as OpenAI, Anthropic and xAI and focus on companies building applications around the technology.
The AI Leaders Have Already Emerged
Draper said the battle among foundation model companies is largely being fought by OpenAI, xAI and Anthropic, adding that he believes the market has already identified the leaders in that segment.
Speaking on Schwab Network’s show, Market Overtime last week and shared on X Tuesday, Draper said the biggest gains from leading AI model developers have been captured, adding that “that boat has sailed.”
Looking For The Next Google
Drawing parallels to the dot-com era, Draper said that companies such as AOL and Yahoo were viewed as dominant internet businesses before Alphabet’s Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Amazon.com Inc (NASDAQ:AMZN) and Apple Inc (NASDAQ:AAPL) emerged as some of the biggest long-term winners after the bubble burst.
Draper said he was looking for companies that may discover new applications for artificial intelligence rather than competing directly with the largest AI model developers.
“So we’re looking around the periphery to see if there are companies that are doing AI that might end up being those companies, the ones that find the really beautiful applications where AI will be used in the future,” Draper added.
AI Applications Could Be The Next Frontier
The venture capitalist spoke about robotics as one area of interest, describing companies developing AI-powered “robot brains” that can learn from experience rather than following pre-programmed instructions.
“I do think that there will be a really good application of AI” in robotics, Draper said, adding that he remains “very active” in the sector.
Draper acknowledged that he previously missed investments in Netflix Inc (NASDAQ:NFXL), Meta Platforms Inc (NASDAQ:META) and LinkedIn, calling them “failures to act,” a lesson that continues to shape how he evaluates emerging technologies.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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