AI Boom Creates 29 Billionaires in 18 Months, 498 Unicorns Worth 2.7 Trillion Dollars

Artificial Intelligence (AI) is generating wealth at an unprecedented pace and scale, creating a new breed of billionaires. Currently, there are 498 AI "unicorn" companies globally with valuations exceeding 100 million dollars, collectively worth 2.7 trillion dollars. This surge in AI-driven wealth creation has been particularly notable in the past 18 months, during which 29 new billionaires have emerged, amassing a combined fortune of 71 billion dollars. This rate of wealth creation is comparable to the internet boom of the late 1990s and early 2000s.

The rapid growth of AI companies is evident in their valuations and the number of new entrants. Among the 498 AI unicorns, 100 were established in 2023 or later, with over 1,300 companies valued at more than 100 million dollars. This influx of capital and innovation is driving the AI sector forward at an accelerated pace. The creation of these AI unicorns is not only a testament to the technological advancements but also to the significant investments pouring into the sector.

The AI sector's growth is fueled by substantial investments from both private and public entities. Companies are pouring billions of dollars into AI research and development, aiming to capitalize on the potential of this transformative technology. The rapid creation of wealth in the AI sector is a clear indication of the market's confidence in the technology's future prospects. As more companies enter the AI landscape, the competition is expected to intensify, driving further innovation and growth.

The emergence of AI billionaires highlights the sector's potential to generate significant wealth. The 29 new billionaires created in the past 18 months are a testament to the rapid pace of wealth creation in the AI sector. This trend is expected to continue as more companies and investors recognize the potential of AI to disrupt traditional industries and create new opportunities.

This wealth creation is not limited to initial public offerings (IPOs). Many AI companies are choosing to remain private for longer periods, relying on continuous funding from venture capitalists, sovereign wealth funds, family offices, and other tech investors. This allows them to maintain a private status while still achieving significant valuations. The secondary market has also developed rapidly, providing opportunities for founders and shareholders to sell their stakes through structured secondary sales or tender offers.

OpenAI, for instance, is currently in discussions for a secondary sale aimed at providing liquidity to its employees. Additionally, many founders can leverage their equity to secure loans. Mergers and acquisitions (M&A) are another significant avenue for liquidity. According to CB Insights, there have been 73 liquidity events in the AI sector since 2023, including M&A, IPOs, reverse mergers, or majority stake acquisitions. For example, Meta's investment of 143 billion dollars in Scale AI led to its founder joining Meta's AI team, while the co-founder of Scale AI, who left the company in 2018, used her equity wealth to purchase a 30 million dollar mansion in Los Angeles.

This AI boom is geographically concentrated in the San Francisco Bay Area, reminiscent of the internet era's Silicon Valley. The region's companies attracted over 350 billion dollars in venture capital last year. The influx of wealth has directly boosted the local economy, with the number of billionaires in San Francisco surpassing that of New York. The Bay Area's millionaire population has doubled in the past decade, while New York's has increased by 45%. This wealth surge has led to a significant rise in housing prices and demand, with San Francisco seeing a record number of homes sold for over 20 million dollars last year.

Despite the challenges of converting paper wealth into liquid assets, the future looks promising. As these private AI companies potentially go public, their wealth will become more liquid, presenting a historic opportunity for the wealth management industry. All major private banks, large brokerages, and boutique investment banks are actively courting AI elites to secure their business. However, serving this new class of wealthy individuals is not without its challenges. Pathstone's executive managing director noted that most AI wealth is still locked in non-liquid private company equity, making it less liquid compared to the wealth of employees from large public companies like Meta or Google.

AI elites are expected to follow a similar pattern to the internet billionaires of the 1990s, initially investing their excess liquidity in similar tech companies through their networks. After experiencing high volatility and concentrated risk in speculative industries, they are likely to turn to professional wealth management services for diversification and protection. This trend underscores the transformative impact of AI on the global economy, creating unprecedented opportunities for wealth creation and economic growth.