A Brief History of Artificial Intelligence (AI) and the State of the Industry Today

AI and related ML (machine learning) are already having a very significant impact on everyday life. Much of this AI use is running in the background, determining the risk in insurance policy applications, checking for fraud when consumers login to payment platforms and ecommerce sites, powering smart chatbots on websites, and enabling transportation systems and manufacturing plants to operate more efficiently.

While most of its uses are relatively new, AI research has been conducted for many decades. The concept of artificial intelligence (often referred to as “AI”) continues to evolve, as scientists and software engineers gain a greater understanding of reasonably possible goals for this technology. In 1956, John McCarthy may have been the first to use the phrase, describing artificial intelligence as “the science and engineering of making intelligent machines.” This was a pretty dramatic statement, considering the barely advanced state of computers and robotics at the time.

In 1950, computer pioneer Alan Turing proposed, in a paper titled Computing Machinery and Intelligence, a test that could determine whether or not a machine could “think.” Essentially, he suggested that, in a situation where a person asked the same questions of both a machine and a human being, if he couldn’t tell the difference between text answers coming from the machine and the human in blind results, then it might be reasonable to call the machine “intelligence.” The Turing Test clearly avoids any discussion of what “consciousness” is.

Gary Marcus, a scientist at New York University, proposed another test, the Ikea Construction Challenge, to see whether or not a machine could assemble a piece of Ikea furniture when provided with a pile of parts and related instructions.

Near the end of 2015, a group of well-known Silicon Valley investors, including Elon Musk and Peter Thiel, announced a long-term commitment to raise funds for a new nonprofit organization to be known as OpenAI, www.openai.com. OpenAI’s founders stated that it was dedicated to moving AI ahead to the point that it “will benefit humanity.” (OpenAI, the developer of the ChatGPT generative AI services and related software tools, released its first software toolkit for developers at the end of 2015. It would be reasonable to consider that to be an early starting date of the AI boom. ChatGPT was released to the public on November 30, 2022, sending interest in AI soaring worldwide.)

In 2023, OpenAI created a for-profit partnership as a separate entity, accepting a substantial investment from Microsoft. Importantly, it has launched leading-edge AI interfaces, including ChatGPT, that are easy to use in the automated creation of text (such as magazine articles), art (such as illustrations for websites), music and even complex computer code. While these AI tools produce very impressive results, they remain a work in progress, with continuing refinement needed. Meanwhile, the use of AI tools such as these that learn from the works of millions of human producers (machine learning), and then create new text, art, etc., will lead to significant debate as to copyrights, fair use and other aspects of ownership.

Microsoft’s Collaboration with OpenAI will Enable the Firm to Embed AI Deeply in Products Including Search

In early 2023, Microsoft announced that it was investing in AI research pioneer OpenAI, which was founded as a nonprofit organization, but later established a for-profit partnership that can commercialize on certain AI projects. The types of advanced research and development that OpenAI is conducting requires deep funding. It also requires access to massive computing power, which Microsoft can provide via its Azure cloud computing platform.

Microsoft also increased its investments in its advanced cloud servers, software and systems in order to accelerate OpenAI’s research. In addition, Microsoft developed a strategy to make AI an integral part of its major product lines, stating that it will “…deploy OpenAI’s models across our consumer and enterprise products and introduce new categories of digital experiences built on OpenAI’s technology.” Strategies include Microsoft’s Azure OpenAI Service, which enables software developers to utilize cloud computing connected to OpenAI models to build advanced products and services that are AI-driven. Microsoft also vastly enhanced its Bing search and popular software tools by integrating GenAI search results as the Copilot bot in appropriate parts of its Office suite (including Microsoft Word).

A well-funded nonprofit AI organization is the Allen Institute for Artificial Intelligence (AI2). Located in Seattle, the group was co-founded by Paul Allen, one of the co-founders of Microsoft, and scientist Oren Etzioni. AI2 has developed its own complex test for artificial intelligence called a GeoSolver.

The rapid growth of cloud computing at reasonable cost has been among the biggest accelerators to the development of AI. The extension of the internet of things (IoT) will likewise boost AI. However, one of the most interesting boosters has been the advent of hundreds of thousands of pre-written parcels of code are available to developers via online portals such as Github. Among them are a large number of code packs that enable users to rapidly create neural networks and other AI tools with limited effort.

Massive investments in research, development and applications of AI and machine learning are being made by government and industry on a global scale. Global spending on AI has been estimated for 2024 at $235.0 billion by analysts at IDC. This amount is expected to reach $630.0 billion by 2028.

Microsoft is investing billions of dollars in its own AI capabilities in addition to its major commitments to OpenAI (owner of ChatGPT). Microsoft (with its Azure unit) and Amazon (with its highly profitable AWS unit) continue to rapidly build their cloud computing capabilities and revenues, with a focus on serving the booming needs of AI-using enterprises.

Silicon Valley’s race to build advanced AI systems has sparked a related frenzy to build data centers with the servers needed to power AI services. Tech companies, as of 2024, including Amazon.com, Google and Microsoft operate 445 data centers in the U.S. and have 249 in the pipeline, according to Synergy Research Group. In 2025, a consortium known as Stargate announced plans to build at least 20 massive data centers, and, over time to invest $500 billion in AI facilities and projects in the U.S. Stargate founders include OpenAI, SoftBank, Oracle and MGX.

SPOTLIGHT: Google’s Outstanding Offering of AI Tools and Services Make New Products Easy for Customers to Launch

Google is investing billions of dollars in AI, not only in developing its own in-house capabilities and services, but also in startups such as Anthropic with promising technologies of their own. Google’s outside investments include major positions in companies like AI chatbot Character.AI. Google is aggressively marketing and enhancing its own AI software and cloud offerings—tools that make it fast and relatively easy for nearly any enterprise to launch sophisticated AI-based initiatives. It is providing superb support for potential users and is investing substantial efforts in providing free education and training for AI customers. Google’s AI tools include:

= Document AI, a unified data and AI platform that provides ready-to-use ML models as well as tools and infrastructure.

= BigQuery, which assists with data management and analysis.

= TensorFlow, which helps users with product development.

= Google Lens, which analyzes the contents of images.

= Google Workspace, which helps users compose text for Gmail and Google Docs.

= NotebookLM, a personalized AI research assistant.

= Vertex AI Agent Builder, an easy to use tool for users to build their own AI agents and applications.

Elsewhere, the semiconductor industry is especially focused on creating advanced chips capable of delivering on the full potential of AI. Leading chip makers are continuously competing for a share of the immense, global market for chips to power AI servers in the soaring number of data centers worldwide. Apple has even started designing its own chips and servers, especially for AI tools on iPhones and other Apple products. Nvidia is considered to be the leading maker of high-powered chips for AI by far, with its competitors trying hard to keep pace. Other companies, such as startup Run:AI are developing software that will help AI chips run more efficiently. Other companies competing in the battle to manufacture chips especially for AI servers include AMD, Qualcomm, Alphabet, Amazon, Samsung and ARM.

Today, a serious battle is in place between the United States and China for long-term dominance of the AI sector. While the U.S. has made the highest total investments in AI research, China, in July 2017, announced that it wants to grow the output of its AI-based industries to 10 trillion yuan (about $1.5 trillion in U.S. currency) by 2030. Firms based in China with very significant and growing reliance on AI include Alibaba, Baidu, Tencent, Huawei and iFlyTek, along with specialty firms Megvii and SenseTime, that have superb capabilities in applying AI to facial recognition.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

Become a Plunkett Research Online subscriber to gain unlimited access to our massive amount of vital industry data and market research.

✔ 100,000 Industry Statistics
✔ 500 Industries Analyzed for Market Size, Profits and Forecasts
✔ 150,000 Industry Executives Profiled
✔ 25,000 Companies Profiled, Ranked and Analyzed
✔ 1,000 Vital Trends Analyzed, totaling 1,000,000 words

Learn More

A Brief History of Artificial Intelligence (AI) and the State of the Industry Today, Business and Industry Trends Analysis

A Representative List of Organizations that Have Used our Research and Products:

How to access Plunkett Research data.

What data challenge can we help you solve today?

Take a Tour

Contact

Testimonials