As artificial intelligence becomes more powerful, the infrastructure required to support it is becoming a much bigger investment opportunity.
Andreessen Horowitz, or a16z, has raised $1.1 billion for its new Machine Age Fund, expanding its focus on the physical systems behind AI. The fund will invest across chips, memory, networking, storage, data centers, robotics and other technologies needed to run increasingly demanding AI workloads.
AI’s Infrastructure Requirements Are Growing
The launch comes as the technology industry faces growing pressure to expand the computing capacity behind AI.
According to a16z, compute density per rack has increased 28 times from an NVIDIA H100 rack to a Rubin rack. Power requirements are changing just as quickly, with today’s advanced systems moving toward roughly 100 to 250 kilowatts per rack and potentially reaching 1 megawatt over the next three years.
Data centers are getting larger as a result. Projects that once operated at tens of megawatts are increasingly moving into hundreds of megawatts, while some planned AI campuses are reaching gigawatt scale.
That growth creates opportunities beyond processors. Faster memory, networking, storage, cooling, electrical infrastructure and new sources of power will all be needed as companies deploy AI at greater scale.
a16z Makes a Bigger Bet on Hardware
Although a16z is widely associated with software investing, hardware has become an increasingly important part of its pipeline.
The firm says hardware startups have grown from a relatively small part of its deal flow to more than 20% over the past several years. Recent investments include Unconventional AI, Nexthop, Volta, Atoms, Heron Power and Mind Robotics.
a16z also has a longer history of investing in companies building physical technologies. It led Skydio’s Series A in 2016, invested in SpaceX, made its first investment in Anduril in 2019 and participated in Waymo’s 2020 funding round.
The new fund effectively turns those investments into a more formal strategy focused on the infrastructure required for the next generation of AI.
Deep Infrastructure Experience Behind the Fund
a16z is also drawing on partners with backgrounds across data centers, enterprise infrastructure and hardware.
Martin Casado leads the firm’s infrastructure practice, while Raghu Raghuram serves as a managing partner and general partner across its Growth and Infrastructure teams. David Ulevitch leads the American Dynamism practice, which includes investments in hardware and U.S. manufacturing.
The Machine Age Fund announcement was published by Ben Horowitz, Martin Casado, Raghu Raghuram, David Ulevitch and David George, giving the initiative backing across several of a16z’s major investment practices.
The AI Race Moves Beyond Software
The Machine Age Fund reflects a broader shift in where value could emerge from the AI boom.
Building more capable models is only one part of the equation. Companies also need the chips, networking, storage, power and data-center capacity required to run those systems reliably and economically.
For a16z, that creates an opportunity to invest much deeper into the technology stack. The firm’s $1.1 billion commitment is a bet that some of the companies defining the next stage of AI will not just build models and applications, but the physical infrastructure that makes them possible.