After three years of decline, funding in AI and cloud companies has risen across the US, Europe, and Israel, with Accel estimating it will hit $79.2 billion by the end of 2024.

The venture capital firm’s new report showed this was an increase of over a quarter (27%), beating out 2023’s $62.5bn. Investments in AI companies represent two fifths of the 2024 figure, showing that AI hype appears to not be going anywhere.

As far as money invested into AI companies, which totals $56 billion in 2023 and 2024, the US is dominating, winning 86% of investment. Companies working on foundation models have won out two-thirds of the funding, totalling $37bn.

Megarounds in the US may be skewing the figures for global AI investment, OpenAI’s $6.6bn, xAI’s $6bn, and Anthropic’s $4bn investment wins turned heads throughout the year.

Private genAI companies in the US gained about $25bn in total, versus $6.4bn in Europe, but funding in Europe appears to be growing at a faster rate. Back in 2023, genAI investment was a mere $2.4bn, while the US amassed $22.4bn.

Accel identified three different genAI leagues that are emerging, including tech titans, AI majors, and AI challengers.

Tech titans, including Amazon, Microsoft, Google, Meta, and Apple, are spending tens to billions on their own AI projects, with OpenAI leading AI major companies in terms of funding.

AI challengers are spending 100s of millions trying to catch up and compete in the accelerating arena.

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Apart from AI, cloud funding is rebounding to pre-Covid levels, the report from Accel shows.

Despite peaks in 2021, cloud funding is now at $47.3bn, just slightly above 2020’s $46.1bn. While the European public cloud index is in recovery, it is still 31% below its peak in 2021.

Further, growth of companies in this cloud index is slowing down, with no company growing more than 40% in 2024.

While AI is doing well, macroeconomic and geopolitical uncertainty are creating new obstacles for tech, whether it be in the form of skills shortages and layoffs, or cybersecurity woes as nation-state threat actors up their game.

Spend on enterprise software is therefore under pressure, which could limit digital transformation efforts as well as cloud and AI adoption.