The numbers are not pretty.

Unstable AI

Stability AI, the maker of the popular AI image generator Stable Diffusion, is in big financial trouble.

As The Information reports, the startup is facing a severe cash crunch and is in talks of being sold off.

It's a major fall from grace. During the early days of the AI race, former CEO Emad Mostaque raised $100 million for the venture at a $1 billion valuation in 2022. But the company has been bleeding cash ever since, with wages and expenses on computing power greatly exceeding revenue.

According to The Information, the company generated less than $5 million in revenue in the first quarter of this year, while losing more than $30 million.

The ironically-named venture is now reportedly sitting on $100 million worth of outstanding bills, indicating the end of the once hyped-up AI startup could be nigh.

Cash Diffusion

The news shouldn't come as too much of a surprise. Stability AI has struggled, especially in the wake of several key researchers leaving the company in March. Days later, the company's embattled CEO Emad Mostaque stepped down to "pursue decentralized AI" — leaving behind a flaming mess, of course.

Mostaque was already embroiled in controversy, having been accused of a "history of exaggeration" including claims that he had a master's degree from Oxford and that he'd been a spy for the British government.

The company is also facing plenty of legal troubles, with Getty Images, the world's foremost provider of stock photos, suing the company over using its intellectual property to train AI models.

It remains to be seen whether a buyer will step up and be willing to take on Stability AI's considerable debt. But since the company's competition is as fierce as ever, buyers may want to think twice.

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