Privately-held artificial intelligence (AI) start-up Perplexity AI is gaining traction and witnessing rapid revenue growth. Its advent first seemed to challenge OpenAI’s ChatGPT, and now Perplexity is contesting with tech giant Alphabet’s (GOOGL) (GOOG) Google Search engine. Perplexity is a free-for-all, AI-backed search engine company that seeks to offer the most accurate, reliable, and real-time answers to users’ queries.
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Perplexity’s Rapid Growth
Perplexity’s revenue is multiplying at an impressive rate. According to the Financial Times, Perplexity has reached a monthly revenue rate of seven times the amount generated at the beginning of 2024. The company is on track to reach annualized revenues of $35 million this year, up from its prior expectation of only $5 million.
This is possible because Perplexity has been able to massively boost the number of queries answered on its platforms. In July, Perplexity’s search platform answered approximately 250 million queries, a staggering growth compared to 500 million questions in the full year 2023.
Perplexity came into being just three months before the launch of ChatGPT in November 2022. The AI platform was started by ex-Google intern, Aravind Srinivas. It has the funding support of big names including Nvidia (NVDA), Amazon (AMZN) founder Jeff Bezos, and OpenAI co-founder Andrej Karpathy. Perplexity recently closed a funding round of $250 million, tripling its valuation from $1 billion to $3 billion.
Perplexity Takes Competition Head-On
Perplexity’s unique attributes are helping it challenge ChatGPT and Google. The tool crawls the internet to fetch real-time data, including news publications. In comparison, ChatGPT answers queries based on data fed up to April 2023. Another difference is that Perplexity does not build its own generative AI models. Instead, it licenses those built by OpenAI, Microsoft (MSFT), and others.
Perplexity recently announced a revenue-sharing model with publishers, called the “Publishers Program.” It has already signed deals with Fortune, Time, Entrepreneur, Der Spiegel, WordPress.com, and others. The company believes that revenue-sharing models work better with publishers than the one-time payment models adopted by OpenAI and other model makers. Earlier in June, Perplexity faced several plagiarism accusations as it missed appropriate citations in its answers.
Unlike OpenAI, Perplexity is turning towards advertisements instead of subscriptions as a major source of revenue. This makes Perplexity a closer competitor for Google Search. Meanwhile, Google will soon integrate new AI features into its products, while OpenAI has launched a prototype SearchGPT model to capture the billion-dollar search industry.
ChatGPT Stocks with Strong Buy Consensus
While Perplexity and OpenAI are not publicly listed companies yet, investors can consider other stocks that are developing ChatGPT-like technology or are gearing up to capture opportunities in generative AI. Here, we can see how some of the “Strong Buy” ChatGPT stocks perform on TipRanks’ Stock Comparison tool.
