The tech business model has fundamentally changed. It has moved from the early Google model—a high-margin, low-CapEx "infinite money glitch"—to the current AI paradigm, which requires a capital-intensive, debt-financed infrastructure buildout resembling heavy industries like oil and gas.

For the past 18 months, AI excitement has created a rising tide that boosted fortunes for all major tech companies. This is changing. In the next year, their strategic bets, investments, and results will diverge dramatically, revealing clear winners and losers as "the tide goes out for some people."

Current M&A activity related to AI isn't targeting AI model creators. Instead, capital is flowing into consolidating the 'picks and shovels' of the AI ecosystem. This includes derivative plays like data centers, semiconductors, software, and even power suppliers, which are seen as more tangible long-term assets.

Unlike the previous era of highly profitable, self-funding tech giants, the AI boom requires enormous capital for infrastructure. This has forced tech companies to seek complex financing from Wall Street through debt and SPVs, re-integrating the two industries after years of operating independently. Tech now needs finance to sustain its next wave of growth.

During a fundamental technology shift like the current AI wave, traditional market size analysis is pointless because new markets and behaviors are being created. Investors should de-emphasize TAM and instead bet on founders who have a clear, convicted vision for how the world will change.

Unlike the asset-light software era dominated by venture equity, the current AI and defense tech cycle is asset-heavy, requiring massive capital for hardware and infrastructure. This fundamental shift makes private credit a necessary financing tool for growth companies, forcing a mental model change away from Silicon Valley's traditional debt aversion.

In the current market, AI companies see explosive growth through two primary vectors: attaching to the massive AI compute spend or directly replacing human labor. Companies merely using AI to improve an existing product without hitting one of these drivers risk being discounted as they lack a clear, exponential growth narrative.

Sam Altman's deal-making prowess isn't just skill; it's fueled by leverage from leading OpenAI, the breakout AI company. Partners feel compelled to collaborate, fearing shareholder backlash for missing the 'next Google', which gives Altman a significant advantage.

Vincap International's CIO argues the AI market isn't a classic bubble. Unlike previous tech cycles, the installation phase (building infrastructure) is happening concurrently with the deployment phase (mass user adoption). This unique paradigm shift is driving real revenue and growth that supports high valuations.