As more businesses adopt artificial intelligence (AI) tools, venture capitalists (VCs) are putting more money into the industry.

Nearly three-quarters of global VCs invested in AI over the past year, with investors identifying AI as the technology with the most disruption potential, according to a recent survey by PitchBook and Collision.

Seventy-four percent of thoജse ♎surveyed said they made at least one investment in AI or machine learning (ML) startups in the last 18 months, and 14% claimed they had made more than six investments in the space.

The number of companies that use AI has also more than doubled since 2017, according to research by McKinsey. Service operations optimization, the creation of new AI-based tools, and customer service analytics are the most widely used cases of AI.

However, funding activities have taken a major blow due to uncertain macroeconomic conditions and rising rates. VCs formed $13 billion in funds during the first quarter of 2023, compared to $78.1 billion in the same period a year ago, according to EY. More than half of investo𝓰rs PitchBook sur🦹veyed said they aren’t looking to raise funds, while 54% suggested they believe that raising funds will be difficult in the next 12 months.

Despite being battered by economic headwinds and rising rates, nearly 68% of respondents claim that their pace of investment over the last 18 months remains near normal. Only 3.4% of respondents said that they have halted investments for the time being.