Name: Startup losses fueling AI booms for Big Tech
Uploaded: 2025-11-14T17:58:57.435Z
Duration: 2 min 56 s
Description: Losses incurred by AI startups are generating significant revenue for major technology companies such as Microsoft, Amazon, and Nvidia. As startups spend heavily on computing resources, this money flows to Big Tech, supporting their strong earnings and creating a cycle where private losses sustain public profits.

Losses incurred by AI startups are generating significant revenue for major technology companies such as Microsoft, Amazon, and Nvidia. As startups spend heavily on computing resources, this money flows to Big Tech, supporting their strong earnings and creating a cycle where private losses sustain public profits.

Losses incurred by AI startups are generating significant revenue for major technology companies such as Microsoft, Amazon, and Nvidia. As startups spend heavily on computing resources, this money flows to Big Tech, supporting their strong earnings and creating a cycle where private losses sustain public profits.

Major investors like Softbank are shifting funds from public market winners like Nvidia to high-spending, unprofitable AI startups, reinforcing the circular nature of the AI economy. This cycle raises concerns about the sustainability of current profits, as any pullback in startup spending could impact Big Tech's earnings.

Startup losses fueling AI booms for Big Tech

Tech stocks rebounding here after three straight days of losses as investors brace for any signs of an AI bubble. But could the private A.I. markets be the source of any froth. Our director Bosa digs into that for today's tech check. Happy Friday D. Hey happy Friday Carl. So yes if you are worried about a bubble in A.I. you really can't ignore what's happening in private markets because startup losses. They are the engine of this boom. Every dollar they burn on compute turns into revenue for Microsoft Amazon Nvidia and others creating the cycle where private losses sustain public profits. Now mega cap earnings. Yes they're booming. That is an argument for the bulls. But it is being propped up by these startup losses which are increasing. Now there's of course the obvious players. We talk about them all the time. Open A.I. and Anthropic two of the largest that are spending big on chips and data centers supplied by mega cap tech losses in the tens of billions. Increasingly though there's another rising cohort of unprofitable and in some cases productless startups funding the boom. Yesterday alone A.I. startups Cursor X Open A.I. CTO Miramar is thinking machines. Elon Musk X A.I. raising billions upon billions of dollars. Cursor is now to nearly 30 billion dollar valuation yet just a billion in annualized revenue. This one is a great example of how startup burn flows upstream. Cursor spends millions on models like Anthropics Claude for A.I. first coding for its customers which in turn pays big tech for compute. Now these startups and dozens more like them they're spending heavily on compute. That money flows back to big tech feeding those same earnings that keep the public A.I. trade afloat. So it's a cycle that sort of reinforces itself. Think about the news earlier this week. Softbank cashing out entirely of its investment in NVIDIA the biggest public winner of the boom to put that money into open A.I. one of its biggest private loss engines. So the irony here is this guys the higher the losses in public markets the better the profits look in public ones. And that makes the economy both bubbly and circular inflated by optimism and sustained by its own losses. So if the startups and the money that's fueling them pull back the mega cap earnings story that goes with them. Yeah which is why it's not. It's not hard to connect the dots. You can look at Softbank if you're wondering how the market would value you know or feels about a certain open A.I. business update. And now the many semiconductors that are also involved in the open A.I. story. That's why the circular nature I think raised a lot of eyebrows. Right. And Softbank is such a good example because it's kind of a kingmaker in this space. Right. It likes to make really big bets on startups and it doesn't care all that much about losses. We've seen that time and time again. So the fact that it's sort of taking money out of its public market bets and a winner like NVIDIA to put them into money losing companies to again prop up this sort of circular economy A.I. economy. That is certainly something that investors should be paying attention to. OK Deirdre. Thank you Deirdre Bosa.

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