Surge AI, a relatively unknown data labeling startup, has surpassed Scale AI in revenue by generating over $1 billion in sales in 2024 compared to Scale AI's $870 million. Founded by Edwin Chen, Surge AI has achieved this milestone without raising any outside capital, maintaining profitability since inception. The company employs 110 staff across offices in New York and San Francisco and serves high-profile clients such as Google, OpenAI, and Anthropic. Surge AI specializes in premium data labeling services critical for AI model training, including grading AI responses through its subsidiary Data Annotation Tech, which pays contractors starting at $20 per hour. Despite its success, Surge AI faces a class-action lawsuit alleging employee misclassification and unpaid work during training sessions, reflecting ongoing challenges in the data-labeling sector. The company’s growth highlights the increasing importance of data labeling as AI becomes a core business tool. Meanwhile, broader industry trends show rapid expansion and investment in AI, with companies like OpenAI targeting $125 billion in revenue by 2029 and venture funds backing new AI architectures. The AI startup ecosystem is experiencing accelerated growth, with some AI-native firms achieving $5 million in annual recurring revenue within nine months and a wave of mergers and acquisitions anticipated as competition intensifies.