Elad Gil on which AI markets have winners — and which are still wide open

Single VC investor extraordinaire Elad Gill On stage at TechCrunch Disrupt That AI is one of the least predictable technological booms he’s ever seen.

Virtually every hit company of the last decade, including today’s leading AI companies, has Gil on the cap table.

Still, he notes that over the past year, certain AI markets seem to have been almost sewn up by market leaders. Outside of these areas, a broad swath of AI remains anyone’s game

“I started investing in generative AI in 2021 … at the time, not many people were paying that much attention to it,” Gill said. But he saw a huge jump in power between GPT 2, Launched in 2019and GPT 3, introduced In 2021. “The step between 2 and 3 was so big that if you figure out the scaling law or the curve, you can really guess that it’s going to be incredibly important,” he said.

This convinced him to start backing early-stage startups building products driven by large language models. His bets included foundational model makers like OpenAI and Mistral, as well as application companies like Perplexity, Harvey, Character.AI, Decagon and Abridge. Yet throughout 2024 and into 2025, the capabilities of foundational models continue to leapfrog with each release, with AI ramping up every few months.

“I used to say at the time that AI was a market where the more I learn, the less I know. Generally, the more you learn about something, the better you know, you can predict the future, etc. But AI was just vague. There’s too much uncertainty. And I think there’s still a market like that in AI,” he said.

However, he now sees a market with clear winners. The most obvious example is with the foundational model. Hundreds of models exist though, and some in countries like South Korea Still working to develop the sovereign model By local companies, leaders have emerged. “Google, Anthropologie, OpenAI, maybe xAI, maybe Meta, maybe Mistral — it’s like a handful,” he predicts of the winners.

Following the model, he thinks there are runaway winners in AI-assisted coding that will make it difficult for new entrants to catch up. Not only have fundamental model makers (Anthropomorphism with Clod Code, OpenAI with Codex) stepped up, startup leaders e.g. Cursor of Anysphere and Devin of Cognition (which windsurf achieved) It will be hard to beat. And there are well-funded startups Like magic (which Gill calls a potential “outlier”).) or Poolside on their tails.

He sees medical transcription as cornered, A front runner with Abridge And like a handful of others the environment “Important.”

He named customer support — which was a primary goal of both traditional AI and the new crop of AI agent startups — as market leaders like his portfolio companies are hard to catch. decagon. (This has been raised $131 million at a $1.5 billion valuation In June.) OpenAI chairman Brett Taylor’s startup, Sierracompetes in this space. This is an area where incumbents – Salesforce, HubSpot and many others – are adding AI offerings.

So which markets seem open? Gill says financial tooling (fintech), accounting, AI security, and “other markets that we know are very attractive by default. We just don’t know who’s going to do it.”

Ironically, rapid growth is not the signal it once was that a company is about to be a breakout hit. “The CEOs of every major company are basically saying to their teams, hey, we have a mandate. We have to figure out an AI strategy,” Gill said. “These giant enterprises are willing to try things that two years ago they would never have tried, and it’s only because of AI.”

So new AI markets can quickly generate a lot of revenue from big-name, enterprise customers, “but that doesn’t mean they’re going to stick around,” Gill points out.

Only after a market goes through its trial-phase boom cycle can a startup and investors see if this revenue will stay and grow. “There are false signals, and then there are things that are working,” Gill said. He called legal AI startup Harvey one of the market-leaders that is “just working.” It raised three huge rounds, jumping from one in 2025 $3 billion valuation $5 billion from $8 billion, In just a few months.