The main question is how you create or preserve value when you do become a neocloud (aka hardware rental company) You’re going to generate a ton of cash, but you’ll only get a terminal value on top of rental revenue potential if you can a) generate value at the application layer, which few will OR b) compete with your hardware suppliers à la Crusoe OR c) own your data centers, turning lease opex into mortgage paydown and extending your modelable ability to generate cash The ingredients of GPU rental businesses are necessary to keep any other AI business alive, but you’ll find investors looking at you more like a project finance company than a tech company It’s what you do with the massive R&D budget your GPU rentals have given you that decides what kind of company you become

*oceans are now battlefields font*: data centers are now battlefields cfr.org/articles/ukraines-at…

Middle strike is 600 km now. Our critical infrastructure is unprepared for a world where drone swarms make strategic bombing cheap and overwhelming.

Value is leaving the hyperscaler/neocloud walled garden and reconsolidating closer to end customers. Capital is following suit. It seems like AI compute lives in two worlds: - Public neoclouds, which are in the business of standing up low IRR projects anchored by unsuable trillion dollar clients and whose debt has been long overpriced - Private neoclouds and GPU companies invisibly serving the upper middle market, clipping high 30s and 40s returns serving the token factories and inference platforms the emerging AI economy runs on, which also happen to enjoy gorgeously above water unit economics This is why Oracle can buy the wrong chips at the wrong price but still renews contracts at increasing prices. If my customers can create 10x more value per GPU/hour than before, so too creeps up the replacement value of a GPU/hour. In the age of inference (read: commercial viability of AI-native products), projects like Kimi, Deepseek, and Sail Research are inflationary, not deflationary. This is also why CoreWeave debt backed by chips and MSFT contracts is cheaper than debt backed by chips and a corporate guarantee. Customer contracts are the true source of value and new return streams mean conventional clouds are no longer the only trade in town. The space has reached escape velocity. The AI bubble isn't popping, but the hyperscaler/neo-hyperscaler bubble may be deflating. Capital is leaving crowded trades and reemerging where differentiated value is actually being created.

Ukraine is teaching Russia what we learned in the Gulf: concentrating critical workloads in conspicuous above-ground DCs is a bad idea

Solvable problems in human capital are one of many wedges the US can and should use to ensure LATAM powers American silicon and doesn’t become a forward operating base for China @CarlMeacham and I get into the implications and urgency here realcleardefense.com/article…

Price per FLOP is a function of value created and thus inflates at the pace of innovation. Cheaper tokens -> more economic value/GPU/hour -> more expensive GPU/hours Newer, faster servers accelerate development software efficiencies and bolster the value of all servers supporting inference, including old ones The pie grows exponentially faster than hardware can come available. True scarcity is in properly configured equipment, not model improvements, and economic rewards will accrue accordingly.