Cisco is benefiting from the AI build-out on the networking side. Despite a market overreaction to a small margin dip, the company posted strong earnings and guidance. Its successful integration of Splunk and foundational role in networking make it an attractive, undervalued AI investment.
For breakthrough technologies like AI and quantum, traditional valuation is less important initially. Investors must buy into the narrative, long-term potential, and quality of the management team, much like early-stage seed investing. Near-term earnings are secondary to the transformative vision.
The feeling that AI development is a "race" is unique to this tech era. According to Aetherflux founder Baiju Bhat, this urgency is fueled by geopolitical competition between the U.S. and China, who both view AI leadership as a national strategic priority, unlike previous consumer-focused tech waves.
The primary advantage of orbital data centers isn't cost, but speed to market. Building on Earth involves years of real estate, permitting, and power grid challenges. The space-based model can turn manufactured chips into operational compute within weeks by treating deployment as an industrial manufacturing and launch problem.
The race in enterprise AI isn't just about agent capabilities, but about owning the central dashboard where employees direct agents across all applications (Salesforce, Jira, etc.). Companies like OpenAI and Microsoft are vying to become this primary interface, controlling the customer relationship and relegating other apps to the background.
To invest in high-risk, transformative fields like quantum computing, structure portfolios with three tiers: established leaders (e.g., IBM) forming the core, "enabler" companies providing key components (e.g., Honeywell), and a smaller allocation to purely speculative startups (e.g., IonQ) to capture upside while managing volatility.
The merger between SpaceX and xAI was likely driven by xAI's high cash burn ($1B/month). By absorbing it, the cash-flow positive SpaceX provides a financial lifeline and makes it easier to raise capital for the AI venture under the umbrella of a stronger, more established brand, boosting the combined entity's IPO prospects.
Baiju Bhat translates his user research expertise from Robinhood to his space startup, Aetherflux. He uses qualitative research with large-scale compute buyers to understand their core needs and determine the specific value proposition—like deployment speed—that makes an audacious concept like orbital data centers commercially viable.