AI Startup Burn Fuels Big Tech Earnings: A Potential Risk

The Interconnectedness of Public and Private AI Markets

• 💡 The AI trade in public markets is significantly supported by the revenue generated from private AI startups.
• 💸 Startup "burn" (spending) directly contributes to the bottom line of big tech companies, keeping the public AI trade alive.

Valuations and Revenue in Private AI Companies

• 🎯 Companies like Curser X are highlighted, with a nearly $30 billion valuation but only $1 billion in annualized revenue.
• 💰 This demonstrates how startups spend heavily on AI models and compute, with that money flowing back to big tech.

Big Tech's Role in the AI Ecosystem

• 💻 Startups are spending millions on compute from big tech companies, which is a key revenue stream.
• 📈 This spending by numerous AI startups fuels the earnings that support the public AI trade.

Investment Shifts and Potential Downside

• 📉 Soft Bank's decision to cash out of Nvidia to invest in OpenAI illustrates a shift towards private AI ventures.
• ⚠️ If startup funding or spending pulls back, it could directly impact the mega-cap earnings story, posing a risk to the current market.