The next ‘golden age’ of AI investment
Good morning, tech reporter Beatrice Nolan here, filling in for Allie Garfinkle.
Fortune just wrapped up its Global Forum in Riyadh, Saudi Arabia, which hosted business and finance leaders to discuss a range of business topics, including—unsurprisingly—the future of artificial intelligence. Speakers included major names such as Qualcomm’s Cristiano Amon, Bridgewater Associates’ Ray Dalio, and Citi’s Jane Fraser, with almost every conversation managing to work some aspect of how AI is reshaping industries.
What caught my eye was Andreessen Horowitz’s partner Anjney Midha sharing his perspective on where, amid an explosion of AI startups and simmering fears of a potential bubble, the next wave of investment opportunity might lie. Midha said the new “golden age” of investment opportunities would come in an “explosion of new frontier teams.”
“It was very popular two or three years ago to say there’s only going to be three or four labs and teams that are going to do any real training…and startups will be left to pick the pieces up of tiny niche opportunities here and there,” he said.
But reasoning models have changed the game, Midha said, referring to the new generation of AI systems designed to “reason” problems step by step, mimicking logic and reflection rather than predicting the next word in a sequence. These models can evaluate their own outputs better, break complex tasks into sub-tasks, and learn from feedback, potentially bringing AI closer to complex, real-world problem-solving.
“Reinforcement learning as a new paradigm is working so extraordinarily well, especially on mission-critical problems,” Midha said. “If you can define the reward model correctly, which startups are really good at doing when they embed themselves inside an industry—they go deep, they go vertical, and they end up understanding the customer’s problem end to end—you can build entirely new, multibillion-dollar companies doing full end-to-end reinforcement learning for each industry.”
During the same panel, Midha also expressed concerns about China’s growing dominance in the open-source AI space, calling the technology “China’s game right now,” something that could pose challenges for the U.S. and its allies. He said Western labs were scrambling to catch up, predicting this scramble would result in a wave of open-weight models from U.S. companies.
Despite some of the ongoing debate about an AI industry bubble, the investment surge doesn’t appear to be cooling off.
According to recent data from S&P Global Market Intelligence, venture capital investment in generative AI has surged to unprecedented levels in 2025, with total funding on pace to more than double from last year. Investors have poured more than $73.6 billion into GenAI application startups in the first three quarters of the year, bringing total investment across the GenAI and broader AI ecosystem to $110.17 billion this year. That figure represents an eightfold increase since 2019.
Much of this capital has flowed to large foundation model providers such as OpenAI, Anthropic, and Mistral AI, which continue to command multibillion-dollar rounds and soaring valuations. OpenAI’s $40 billion funding earlier this year remains the single largest deal, while Anthropic’s $13 billion round and Mistral’s €1.7 billion Series C underline the dominance of a handful of major players.
In other news: Fortune’s Cyber 60 list is out! The annual list, created in partnership with Lightspeed Venture Partners, ranks the most promising startups in the cyber security sector. This year’s list has lots of new names developing innovative tools to defend against AI threats, while some of the existing heavy hitters on the list have raised more capital and built out their rosters of customers. Check out the Cyber 60 list here.
Correction: Yesterday’s newsletter mistakenly said that Figma listed its shares on the Nasdaq, when of course, its IPO was on the NYSE. We regret the error.
Beatrice Nolan
X: @beafreyanolan
Email: bea.nolan@fortune.com
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This story was originally featured on Fortune.com