Andreessen Horowitz Stakes $3B on Bursting the AI Bubble Bet

Andreesen Horowitz sees no toil or trouble and certainly no bubble. 

Instead, it’s effectively wagering $3 billion that the future value of artificial intelligence — which is upending everything from what we watch to what we buy and how we get around — will be underpinned by the companies perfecting its back-end systems and tools.

The venture capital firm recently designated $1.7 billion for its infrastructure arm, which it says invests in “every level of the AI stack,” including foundation models, core AI systems, developer tools and next-gen cloud, data and security systems. That’s on top of the $1.25 billion that a16z — the firm’s preferred nickname — raised to invest in AI infrastructure in 2024. 

AI ‘Magic’

While Martin Casado, the a16z general partner who heads the infrastructure practice, acknowledged in a recent interview with Bloomberg that “private valuations are crazy,” he said he’s not worried about an AI bubble. “This stuff is magic,” he added. “The users are real. The demand is real. The GPU usage is real.” 

And so, of course, is the need for the behind-the-scenes software that everyday consumers hardly think about. “Some of the most important companies of tomorrow will be infrastructure companies,” Raghu Raghuram, another general partner at a16z, told Bloomberg. 

The firm has recently reaped some fruits from its labor, with AI startups that it has backed being acquired by Stripe, Meta and Salesforce. But at the crux of the bubble-or-boom question is whether businesses will keep buying AI companies as valuations skyrocket. Many are skeptical:  

• Dean Baker, an economist and co-founder of the Center for Economic and Policy Research (CEPR), recently told The Washington Post that he’s shifting his investment portfolio to limit his exposure to what he says is an AI bubble getting closer to popping.
• Michael Burry, made famous beyond Wall Street by The Big Short, which chronicled his prediction of the housing market crash, said on X last month that “OpenAI is the next Netscape, doomed and hemorrhaging cash,” comparing the creator of ChatGPT to a casualty of the bursting dot-com bubble. 

Sticking to Software: Andreessen Horowitz has avoided some AI investment trends, like putting money toward the booming construction of AI data centers. Still, figures from S&P Global last month showed that more than $61 billion was invested in developing such centers in 2025.