AI bubble? Never heard of her… 

Silicon Valley is back on its favorite drug: valuations that don’t make sense. Case in point: Cursor, an AI coding app is now worth $29.3B… and all it does is help developers write code faster so they can ship bugs faster. A two-month-old “AI computer” startup raised $475M in a seed round, which is the kind of sentence that makes your dad ask if the market is a joke. (It is.) And some AI model ranking website is sitting near $2B like it’s the iPhone.

(Source: Imgflip) 

Meanwhile, as everyone argues “bubble vs. revolution,” Andreessen Horowitz just walked in with a duffel bag of straight cash homie to bet on one thing and one thing only: the plumbing. For context, a16z has been running this AI infrastructure fund that started at $1.25B in 2024. Now they’re stuffing another $1.7B into it. That’s about $3B aimed at the most boring, necessary parts of AI… infrastructure. Translation: They’re not grifting the data center frenzy, and they’re not trying to outspend Big Tech on concrete and power. Instead, They’re buying the stuff every AI company ends up paying for when the demo stops and the bills start: coding tools, model deployment, security, enterprise backend junk, and billing platforms. 

(Source: Bloomberg) 

Meaning, a16z could give a rats a$$ whether or not who wins the AI race. What matters more is betting that everyone will be forced to pay rent just to stay in the race. Because this whole boom has a dirty secret. Sure, the flashy AI products are the fun part. But the real money is in the “you can’t run without this” part. That’s the business model. Sell picks and shovels while the miners hallucinate gold.

That said, the guy running this fund is Martin Casado…ex-founder, deeply technical, sold Nicira to VMware for $1.26B. And yet, he straight up admitted private valuations are “crazy,” but says demand is real. Which… fair. The GPUs are getting cooked. The cloud bills are nuclear. And companies are buying AI tools like it’s mandatory training. So far, the fund’s been catching exits too. Stripe is reportedly buying Metronome for $1B. Salesforce acquired Regrello. Meta bought WaveForms. Cloudflare scooped up Replicate. And a16z was the puppeteer behind the scenes of it all. 

(Source: Giphy) 

So yeah… while Wall Street thinks a16z is “betting against the AI bubble”... they really aren’t. They’re doing something way more cynical and way more profitable. They’re betting that even if half these companies are overpriced, overfunded, and overhyped… they’ll still spend real money on infrastructure until the day they die. And when the bubble actually pops… who cares? The plumbing still gets paid. And a16z is positioning themselves accordingly. Until next time, friends… 

At the time of publishing, Stocks.News holds positions in Meta as mentioned in the article.