Google is planning to invest in artificial intelligence startup Character.AI, according to reporting from Reuters.
The investment could be hundreds of millions in convertible notes, a source familiar with the matter said, which Character.AI would use to train its models.
The Alphabet Inc (NASDAQ:GOOG) company has an existing partnership with Character.AI, using Google’s cloud services and Tensor Processing Units (TPUs) in model training.
Character.AI was founded by former Google employees Noam Shazeer and Daniel De Freitas, and its models allows users to communicate with AI versions of celebrities and characters as well as create their own chatbots.
Alphabet’s investment, should it come to pass, is part of a recent trend of AI startups getting funding from bigger fish in the tech sector, analysts at Wedbush noted in a note to clients.
“We generally see additional investment in LLM startups as supporting continued build-outs of training resources, with NVDA being the primary beneficiary of this investment (even though Google's and Intel's investments appear to be tied to use of their technology),” the analysts wrote.
“At the same time, we'd note that we don't expect all models to be successful and the eventual failure of some startups ... could eventually also be the catalyst that finally yields a pause in the sharp growth we've seen in AI servers/silicon.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
Follow him on Twitter @andrew_kessel