Industry AI Minute Newsroom 2026-08-29

The firm that said software was eating the world has raised $1.1 billion for the part of AI you can drop on your foot

Andreessen Horowitz announced its Machine Age fund on 28 August: $1.1 billion, the firm's first vehicle dedicated to hardware infrastructure. It will back processors, memory, networking, storage, robotics, data centres and finished appliances — the definition stretches from a data centre to a home AI device. The firm's argument is that the physical layer is now the binding constraint on AI: every part of the supply chain is capacity-constrained, from chips to memory to power, and compute density per rack has risen roughly 28-fold from an H100 to a Rubin rack while the hardware industry's usual 20 to 30 percent annual growth cannot meet triple-digit demand. Hardware has gone from a sliver of a16z's deal flow to more than a fifth. The firm has funded hardware before — SpaceX, Anduril, Skydio, Waymo — but never as a main focus.

Why it mattersFifteen years ago Marc Andreessen wrote that software was eating the world, and his firm built itself on the premise that the slow, capital-hungry, physical part of computing was somebody else's problem. This is that firm saying the slow, capital-hungry, physical part is where the returns are. Whether the fund does well is a separate question; as a reading of where AI is actually stuck it is hard to argue with. The bottleneck is no longer ideas or even models. It is chips, memory, power and the years it takes to build any of them — and venture capital, which is good at funding things that scale in months, is now trying to fund things that scale in decades.

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✓ Verified · 3 sources

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The firm that said software was eating the world has raised $1.1 billion for the part of AI you can drop on your foot

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