Because boards lack deep expertise in AI's seismic impact, they are pursuing scale-driven M&A. The goal is to accumulate diverse assets ('cards in a deck') to maintain flexibility and strategic options in an unpredictable, AI-driven future, rather than making specific bets on the technology itself.

Similar to the dot-com era, the current AI investment cycle is expected to produce a high number of company failures alongside a few generational winners that create more value than ever before in venture capital history.

Unlike debt-laden startups, tech giants are funding AI buildouts with cash and can weather a downturn. They fully expect smaller, leveraged competitors to go bankrupt, creating a strategic opportunity to purchase their data center assets for pennies on the dollar, thereby reducing their own future capital expenditures.

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.

The current AI market is like hot, moving fat in a skillet—fluid and competitive. The key strategic question is predicting when "the heat comes off and then everything's fixed." This "congealing" moment will lock in market leaders and make disruption much harder, marking the end of the wild early phase.

Madrona Ventures anticipates a rise in private-to-private mergers as a key trend for 2026. With questions about the long-term durability of even fast-growing private AI companies, consolidation is seen as a primary way for winners to emerge and build more defensible businesses in a volatile market.

NVIDIA promised to buy any of CoreWeave's unused cloud service availability. This unusual arrangement, while helping CoreWeave secure debt financing, makes it difficult for investors to gauge real, organic market demand for its services, potentially hiding early signs of a market slowdown.

In a market downturn, public AI companies face mark-to-market stock pressure and employee anxiety. As a private player whose public partners' valuations depend on it, OpenAI could be insulated from this volatility, giving it a stability advantage.

CoreWeave argues that large tech companies aren't just using them to de-risk massive capital outlays. Instead, they are buying a superior, purpose-built product. CoreWeave’s infrastructure is optimized from the ground up for parallelized AI workloads, a fundamental shift from traditional cloud architecture.