Payments giant Stripe has declared an "AI boom" in its annual letter, citing data that shows artificial intelligence startups are growing at a record pace. According to Stripe, the top 100 AI companies by revenue were able to achieve $5 million in annualized revenue in just 24 months in 2024, compared to the top 100 SaaS companies taking 37 months in 2018 to reach the same milestone.

This rapid growth is attributed to the proliferation of industry-specific AI tools, which are helping startups "properly realize the economic impact" of large language models (LLMs). Stripe CEO and co-founder Patrick Collison highlighted examples of this AI boom, including AI-powered coding assistant Cursor, which exceeded $100 million in revenue, and Lovable, which hit $17 million in annual recurring revenue (ARR) in just three months.

Collison also noted that Bolt achieved $20 million in ARR in two months' time, demonstrating the rapid growth of these AI startups. He emphasized that these companies are not simply "LLM wrappers" but are instead building businesses at a record pace, with contextual, data, and workflow integration that will prove enduringly valuable.

The letter also highlighted the growth of vertical SaaS, particularly in the small business sector. Stripe reported that 6.3% of small and medium-sized businesses (SMBs) powered by vertical SaaS platforms on Stripe earn $1 million in total revenue in their first year, nearly 60% more than in one benchmarked comparison set.

In addition to its observations on the AI boom and vertical SaaS, Stripe's annual letter also reported that payment volume in 2024 grew to $1.4 trillion, up 38% on the year before. The company also confirmed a tender offer where investors will buy up shares from employees at a valuation of $91.5 billion, and announced plans to repurchase shares as part of the transaction.

The implications of Stripe's findings are significant, suggesting that AI startups are poised to disrupt traditional industries and create new opportunities for growth. As the AI boom continues to gain momentum, it will be interesting to see how these startups evolve and shape the future of technology.

Stripe's bullish outlook on vertical SaaS, particularly in the small business sector, also underscores the importance of industry-specific solutions in driving growth and innovation. As the company continues to support entrepreneurs and businesses, its insights into the AI boom and vertical SaaS will be closely watched by industry observers.