Perplexity AI, a generative AI search engine startup backed by Nvidia (NVDA), is looking to raise around $500 million in a new funding round, which would value the company at around $8 billion, according to the Wall Street Journal. This is an increase from its previous valuations of $3 billion in June and $520 million in January, reflecting the rising investor interest in the generative AI space.
It’s important to note that Perplexity AI has capitalized on the booming AI market, securing three funding rounds within a year. The company’s rapid growth highlights the rising interest in AI-powered search solutions, especially after OpenAI’s ChatGPT success. Earlier this month, Microsoft-backed OpenAI raised $6.6 billion at a valuation of $157 billion, which it plans to use to enhance its AI research and computing power.
Perplexity’s Revenue Soars Amid Legal Battles
Perplexity generates revenue through premium consumer subscriptions and its recently launched enterprise solutions for corporate customers. Importantly, the company’s annualized revenue is estimated to reach $50 million, up from $10 million reported in March. To diversify its revenue sources, Perplexity AI plans to introduce advertisements within its AI-generated answers.
However, the company is currently facing legal challenges. Last week, it received a “cease and desist” notice from the New York Times, asking Perplexity AI to stop using its content for generative AI. On top of that, media outlets like Forbes and WIRED have accused Perplexity AI of copying content. These legal issues, combined with tough competition in the AI space, show the challenges the company faces as it tries to grow and gain market share.
Is Nvidia a Good Stock to Buy Now?
Turning to Wall Street, NVDA has a Strong Buy consensus rating based on 39 Buys and three Holds assigned in the last three months. At $153.86, the average Nvidia price target implies 11.49% upside potential.
