- Intel's significant investment in Stability AI challenges the dominance of OpenAI and ChatGPT in the AI sector.
- Stability AI, amid internal challenges and leadership controversies, continues to attract major strategic investments.
- Stability AI focuses on research and development, expecting further growth with the release of new products.
November 11, 2023: Intel Corporation, a renowned chipmaker, is taking a bold step in the AI industry by significantly investing in Stability AI, a notable startup known for its Stable Diffusion image-generating software.
This move positions Intel squarely against OpenAI and its widely known ChatGPT, marking a pivotal moment in the competitive AI market.
In a strategic move, Intel has provided Stability AI with an AI supercomputer equipped with high-end Xeon processors and over 4,000 Gaudi2 AI processors.
This investment, completed in October, saw Stability AI raising just under $50 million through a convertible note. The details of this financing round were shared by insiders who chose to remain anonymous.
A representative from Stability AI highlighted the company’s strong appeal to both major venture capital firms and strategic investors, leading to continued fundraising interests.
CEO Emad Mostaque, in a social media post, hinted at significant strategic funding secured in the previous month, with official announcements expected to follow.
While Intel did not comment on the investment, it had previously announced the development of the AI supercomputer in September, naming Stability as the “anchor customer.” This investment comes at a crucial time for Stability AI, following a period marked by the departure of several senior employees, including the head of human resources.
The company’s internal dynamics have seen some turbulence, with board representatives expressing concerns about the leadership of CEO Emad Mostaque.
Major supporter Coatue Management, in particular, had issues with Mostaque’s leadership style, leading to discussions about appointing a co-CEO or president.
Despite these challenges, Stability AI responded by emphasizing that personnel turnover is typical in startups and expressed respect for the board’s guidance.
Coatue’s general partner, Sri Viswanath, previously a member of Stability AI’s board, was notably absent from a board meeting earlier this year, replaced by a Coatue lawyer.
In October, Coatue reportedly exited Stability AI’s board, which may have been influenced by Intel’s investment and Coatue’s stake in Advanced Micro Devices Inc. Despite leaving the board, Coatue still holds a significant $50 million stake in Stability.
Additionally, Gaurav Gupta of Lightspeed Venture Partners stepped down as a board observer at Stability AI due to disagreements over the company’s direction.
Stability AI has maintained a policy of not disclosing confidential board matters.
The company, which initially gained prominence with a $101 million seed round in October 2022, has faced challenges in securing funding at a higher valuation.
Despite high monthly expenses and lagging revenue generation, Stability AI has refocused on research and development, reporting a tenfold revenue growth in the past year.
CEO Emad Mostaque’s leadership has been controversial, with his optimistic discussions about partnerships and products sometimes considered overreaching.
Furthermore, a legal dispute arose with co-founder Cyrus Hodes over the sale of shares just before the company’s valuation reached a billion dollars.
Despite these hurdles, Mostaque remains optimistic about Stability AI’s future, expressing enthusiasm for upcoming innovations and product developments. He emphasizes the importance of building valuable solutions, indicating a positive outlook for the company’s journey ahead.
