Midwifing the Next Species in a Datacenter š©š»āāļø
Datacenters struggling to meet demands for compute amid rise of bottlenecks. Hardware eats the world with HBM Chip shortage.
Good Morning, everyone.
Itās a very hot and humid June here near Taichung, Taiwan.
Welcome back to AI Supremacy where we cover AI at the intersection of business, finance, tech, society, culture and civilization. We also try to deliver to you a few AI guides each month.
Iām not sure if Anthropic is 'midwifing a deity' according to VC Bill Gurley, but they have seemingly beaten OpenAI to a confidential IPO filing that enables them to fast-track what will likely be the biggest AI IPO in history in September, or October later this year. Itās a frantic situation for some of the fastest AI startups in history.
āThe AI supercycle has 4 bottlenecks: compute, memory, power and now photonics.ā - Crack the Market Newsletter (Ozeco)
Itās an exceptional time, Google wants to raise another $80 billion in stock, including through a $10 billion investment by Berkshire Hathaway for the unique challenges of more AI Infrastructure and power solutions.
Claude for Equity Research
Meanwhile our guide on using Claude for investing by Michael Fritzell got a lot unexpected organic traffic and bookmarks on X, where people are using AI for equity research, and beginning to use agents for investing. What struck me about this piece is the number of bookmarks, free trials and buzz it was getting across social media.
The Datacenter Acceleration & Backlash šØ
There are a lot of Datacenter stories that I want to catch up to drive and give you a holistic picture from many angles about the space and the reality not just from the VC and corporate side but from the more human, energy, local community and environmental perspectives as well.
In April, Alphabet updated its full-year capital expenditure range to as much as $190 billion and others like Meta and Amazon may go even further so thereās a steep increase in corporate foreign bonds (debt) and various projects around Energy and Datacenters. With SpaceX having to sell compute to Anthropic just to make ends meet pre-IPO, Meta might become a glorified Neo Cloud as a side gig. These my friends are weird times. Google had already last month announced a TPU based Neo Cloud with Blackstone.
In this article Iāll try to cover some trends Iām noticing and some Datacenter stories that caught my eye over the past few weeks. Scroll down for more on this.
AI Startups are Eating Pre Generative AI Startups: Fallen Unicorns š¦
In Venture Capitalās obsession with AI, they are funding newer startups that are AI-native post 2023. For instance, AI is ādisruptingā startups pre ChatGPT. Nearly half of Americaās 857 unicorn startups havenāt raised fresh funding in three years, PitchBook data shows.
While business creation appears to be higher, thereās carnage in the startup world. Nobody told you more than 220 companies that once hit billion-dollar valuations are now considered āfallen unicornsā.
The concentration of capital is also damaging - in that, the AI boom that has funneled more than $250 billion into OpenAI and Anthropic and reset valuations on entire classes of startups. Thereās a kind of price for this kind of American innovation. Itās pure carnage in the land of startups and Silicon Valley doesnāt like to admit the obvious:
āStartups that last raised in 2021 are now worth 68% less on average, while those that last raised in 2022 saw a 52% decline, according to Pitchbookās own valuation estimates.ā - CNBC
Startups that raised just 4 years ago, in 2022, are down 52%. Just like I predict now, startups born with agentic AI might destroy AI startups pre Agentic AI, for example pre 2026. AI in many ways is a great destroyer of capital not just in Capex but in the cost of Venture Capital FOMO on all the other industries that would ordinarily be getting funded.
Itās not just the demand for compute thatās accelerating, itās the speed of adaptation.
