Venture capital investment in generative AI jumped by 65% in the first 11 months of the year, according to new analysis from EY Ireland.
Total VC funding in the sector hit $87 billion in the period – which is also 350% higher than in 2023.
However the number of deals fell significantly – signalling a focusing of investment on a smaller number of firms.
“What we’re seeing in the data… is that there’s a bit of a maturing of the venture capital scene,” said Grit Young, EY Ireland Partner and Technology, Media and Telecoms Lead.
“What we’ve seen is a concentration of funding into the more mature companies and those that can answer some of the harder questions, such as path to profitability,” she added.
Capping off what has been another remarkable year for the technology, Time Magazine named the Architects of AI as its person of the year.
Meanwhile Disney announced a $1 billion investment in OpenAI, part of which will see some of its iconic characters come to ChatGPT and Sora.
But the level of activity has led to concerns about an AI investment bubble.
Ms Young said there would undoubtedly be some “froth” in the sector, but that what was happening here was very different to what was seen during the dotcom boom.
“So what we don’t see this time around, as we saw in the dot-com bubble, we see a concentration of investment coming from players that are highly cash generative,” she said. “I find it very reassuring and very healthy that investors have started to ask since last year, actually, what is the return on investment going to be?”
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The EY report notes that more than half of VC funding into AI has come from sovereign wealth funds – particularly those in the likes of Saudi Arabia and the United Arab Emirates.
“The incentive for them is they want to ensure that their nations have access to compute, data assets and some of the most advanced AI models,” Ms Young said. “And I think that the geopolitical uncertainty we’ve been seeing in 2025 probably adds to that strategy.”
And, she said, Ireland was well-positioned to benefit from that – given its position and reputation in technoogy in general.
“We are the HQ of most of the technology companies that are leading in this field in Europe,” she said.
“It’s also a great sign of confidence that Investopia, which is an investment conference led by the UAE – a key country driving the investment in AI – is going to be happening here on Monday in the Convention Centre,” she added.
