Sequoia Sees Bigger Money in AI-Linked Software Than Models (1)

Venture capital giant Sequoia Capital believes the bulk of billion-dollar companies created in artificial intelligence will come from making applications rather than building models, although it is investing in both, partner Pat Grady said at a conference Wednesday.

Speaking at a Goldman Sachs Group Inc. event in San Francisco, Grady said the firm had put about $150 million into companies building foundation models, such as Sam Altman’s OpenAI, Ilya Sutskever’s Safe Superintelligence Inc. and Elon Musk’s xAI. These models, which serve as the building blocks for products offered by many of the latest AI companies, are extremely expensive to build.

Given the more than $55 billion ...