IBM survived Washington and still lost the layer that mattered. Wall Street now fears the same fate for AI: the Nasdaq in correction, Seoul halting trades, CoreWeave’s default insurance at a record. Congress may not stop the race. Whoever controls the power, chips and credit may decide it instead.
Wall Street’s post-election relief gave way to a sharp AI sell-off last night, as investors weighed construction delays, borrowing costs and political scrutiny. With chipmakers leading the losses, the question is becoming more urgent: which businesses can afford to wait for the promised returns?
America’s midterm verdict puts the AI boom under fresh scrutiny. As Democrats prepare to take Congress, markets are weighing tighter infrastructure rules, financing risks and enduring trade tensions against the possibility that political restraint could make the investment cycle more sustainable.
a16z’s US$1.1 billion Machine Age Fund targets chips, memory, networking, data centres, robotics and power, arguing that AI’s next bottleneck is the physical infrastructure behind the models.
a16z has raised US$1.1 billion for the Machine Age Fund, targeting chips, memory, networking, storage, data centres, robotics and AI appliances. A firm associated with software is betting that AI’s bottleneck is now hardware, energy and industrial capacity. This money signals a decisive shift in global venture capital priorities today.
a16z argues that rack compute density has increased 28-fold from an H100 rack to a Rubin rack, while rack power has moved from roughly 5–10 kilowatts to 100–250 kilowatts and could reach one megawatt within three years. Data centres are moving from tens of megawatts to hundreds, and sometimes gigawatt-scale campuses. The firm says suppliers accustomed to 20–30 per cent annual growth cannot meet the triple-digit growth in capacity required to catch demand.
These are a venture investor’s estimates, not independent forecasts. The next generation of AI companies will need to solve constraints in memory bandwidth, interconnects, cooling, power conversion, materials, real estate and manufacturing. That shifts opportunity away from the model layer alone and towards the firms that make intelligence reliable, affordable and physically deployable.
a16z identifies power-efficient edge devices, robotics and home AI appliances as part of the same infrastructure story. They share a collision between rising compute demand and slow hardware supply cycles.
“We need faster, more efficient systems. We need cheaper and higher-bandwidth memory across the memory hierarchy. We need faster and more scalable interconnects between nodes and systems.” — Ben Horowitz, Martin Casado, Raghu Raghuram, David Ulevitch and David George, a16z partners
The fund signals that AI investing is becoming an industrial buildout. Returns will depend less on novelty alone than on execution in factories, utilities, component supply and customer deployment. The race to build AI has become a race to rebuild the machinery beneath it.
The fund makes a strategic distinction between AI software and the physical systems that enable it. Model builders may command attention, but performance and availability increasingly depend on memory, networking, energy, cooling and manufacturing capacity.
For founders, this opens more capital for difficult, long-cycle infrastructure businesses. For investors, it creates a sharper set of risks: hardware companies require patient capital, reliable supply chains, technical validation and customers willing to adopt unproven systems. For policymakers, it reinforces the connection between AI competitiveness and electricity, industrial capability and secure supply chains.
Get the stories that matter to you.
Subscribe to Cyber News Centre and update your preferences to follow our Daily 4min Cyber Update, Innovative AI Startups, The AI Diplomat series, or the main Cyber News Centre newsletter — featuring in-depth analysis on major cyber incidents, tech breakthroughs, global policy, and AI developments.
Britain’s AI-security package ties agentic cyber defence, vulnerability discovery, AI model testing and biosecurity. Institutional shift matters: funding supports testing, assurance and deployment pathways, while the NCSC says human judgement and oversight must remain central as AI gains autonomy.
The FCC’s Intel waiver shows that semiconductor sovereignty depends not only on chips, but also on the factory robots that move materials. The one-year exception protects continuity without creating a blanket exemption, keeping national-security controls and manufacturing resilience aligned today.
SpaceX posted a US$4.4 billion quarterly profit as AI revenue surged, while Tesla and SpaceX courted Korean suppliers for their Terafab chip project in Texas. Musk is targeting production in 2028 as the companies also explore a potential merger.
From the UN in New York to a proposed AI campus near Dalby, Australia is seeking a voice in rules and a stake in the infrastructure. Albanese’s diplomatic push raises a practical question: can global ambition deliver local benefits while protecting energy, water and Australia’s digital sovereignty?
Where cybersecurity meets innovation, the CNC team delivers AI and tech breakthroughs for our digital future. We analyze incidents, data, and insights to keep you informed, secure, and ahead. Sign up for free!
