      Tomasz Tunguz (Theory Ventures) · 2024-02-09
      · 846d
    

AI vs Non-AI Software Valuation Divergence in Early 2024

Early 2024 marks a significant repricing of software startups based on AI capabilities, with AI companies trading at 2.5x multiples of non-AI peers in public markets. AI software companies are projected to grow 63% faster than non-AI companies, driven by strong customer demand and demonstrated productivity gains of 50-70% at enterprise leaders like Microsoft and ServiceNow.

8 metrics· Cited 0× in the knowledge base ·Open source ↗

Metrics in this report

AI to Non-AI Valuation Multiple

2.5x

mean

public market software companies

Cloudflare Stock Performance

21%

recent gain

recent earnings

Confluent Stock Performance

34%

recent gain

recent earnings

Growth Rate Differential

63%

relative increase

AI vs non-AI software growth 2024

Microsoft Productivity Gain

70%

reported

organizational productivity improvement

Projected Growth Rate

23%

mean

AI software companies 2024

Projected Growth Rate

14%

mean

Non-AI software companies 2024

ServiceNow Productivity Gain

50%

reported

organizational productivity improvement