Stability AI Is Reportedly Shopping Around for a Buyer

They jinxed themselves with their own name.

Stability AI, the London-based startup behind popular AI-powered image-generator Stable Diffusion, is shopping itself to potential acquirers, sources told Bloomberg. The sources said a deal isn’t definite, but a major investor has raised red flags about the state of the company’s finances and is pressuring CEO Emad Mostaque to step down. ‘Tis the season for ousting AI CEOs, which also makes us wonder how much more unstable AI could get.

Instability AI

Stability has been a pretty big name in the generative AI explosion that followed ChatGPT’s public release last year — big enough for Getty to target in a copyright lawsuit filed last January. And Mostaque himself has subtly fed into the idea that the investment pouring into AI companies may be a tad exuberant, telling analysts in July that he believes AI will be the “biggest bubble of all time.” The company raised $101 million in October last year, reportedly achieving a valuation of $1 billion. Truth to power, Mostaque. Right on.

But one of the investors behind that round of funding, Coatue Management, has internally sounded the alarm about both the company’s finances and Mostaque’s leadership, sources told Bloomberg. Now the company might be exploring options to sell itself — though it’s not necessarily shopping itself to bigger tech fish:

• Sources told Bloomberg that Stability has held a few early-days talks with companies that could potentially purchase the company, including two other AI tech startups, Jasper and Cohere.
• A Stability spokesperson pushed back against that claim. “While several parties have expressed interest in the purchase of Stability AI, we are not trying to sell the company and are focused on releasing leading models,” the spokesperson told Bloomberg.

Try Pirelli’s Miracle Algorithm: The AI gold rush has been in full swing for 12 months now, but that hasn’t actually translated into a ton of M&A activity in the sector (unless you count Microsoft briefly adopting Sam Altman before he returned to OpenAI). An October EY survey of CEOs across all sectors found this is because so many AI startups are promising marvels of technology that CEOs with acquisitions on their minds have a hard time separating the legitimately cool tech from the more snake-oily variety. There’s gotta be AI that can help them with that.