Big Tech earnings for the latest quarter kick off today with Microsoft, and all eyes are on AI-related capex.

Why it matters: What these big companies spend on AI chips has big implications for AI startups and their investors.

• Big cloud providers like Microsoft's Azure and Amazon's AWS are buying up (and making) AI chips not only for their own uses, but also to sell access to those compute resources to other companies, from AI giants like OpenAI to tiny startups.
• VCs poured $38.6 billion into AI and machine learning startups in the U.S. in the first half of 2024, per PitchBook. In all of 2023, they invested $64.6 billion.

The big picture: Nvidia's data center revenue — a proxy for how much the market is spending on AI capex — has been growing at a fast clip.

• Last quarter, it raked in $22.6 billion in data center revenue, up 23% from the previous quarter and up 427% from a year ago (yes, it more than quadrupled since early 2023).
• The company is scheduled to announced its next quarterly results on Aug. 28. Rivals AMD and Arm are scheduled for today and tomorrow, respectively.

Zoom in: Microsoft spent $14 billion on capex last quarter, up 79% and expected to say this afternoon that kept growing.

• Alphabet spent about $12 billion last quarter, up 90% year over year.
• Meta spent $6.7 billion, a bit less than it spent a year prior, though the company raised its capex guidance for the year to $35 billion-$40 billion, up from $30 billion-$37 billion.

Between the lines: There's already some skepticism about this level of AI infrastructure investment and whether we'll ever get the necessary levels of revenue to justify it.

• In a recent blog post, Sequoia Capital partner notes that OpenAI is still generating the bulk of AI-related revenue right now, and its annualized revenue has been pegged at a mere $3.4 billion. Even if major tech companies generate $5 billion-$10 billion in annual AI revenue, it'll barely cover the 2024 infrastructure investment, per his estimate.
• Meanwhile, Barclays estimates that AI capex by 2026 will be sufficient to support 12,000 AI products of the scale of ChatGPT — and it's unlikely we'll get or want 12,000 such apps.

The bottom line: Whatever the numbers we see this week from the Big Tech companies, some venture capital will be incinerated as an indirect result of it.

Type One Energy, a Knoxville, Tenn.-based fusion energy company, raised $53.5 million in additional seed funding led by Bill Gates' Breakthrough Energy Ventures, with Foxglove Ventures and GD1 also participating.

Why it's the BFD: Entrepreneurs and investors are starting to take nuclear power seriously as climate change (and energy-hungry AI tech) make the need for alternative sources of energy more and more dire.

The bottom line: "Type One is hoping to commercialize its stellarator fusion tech by 2030, which [CEO Christofer] Mowry says 'is not a long time.' ... [It] is expecting to invest $223 million into building its first prototype in outside of Knoxville." — Katie Fehrenbacher, Axios

🚑 Flo Health, a U.K. women's health app, raised more than $200m in Series C funding at a $1b valuation from General Atlantic. flo.health

🚙 Rapido, an Indian motorcycle taxi ride booking app, raised $120m in Series E funding at a $1b valuation led by WestBridge Capital, with Khazanah also participating. axios.link/3YrDzIS

• Gradient AI, a Boston insurance software startup, raised $56.1m in Series C funding led by Centana Growth Partners, with MassMutual Ventures, Sandbox Insurtech Ventures and Forte Ventures also participating. gradientai.com

• Unspun, an Oakland 3D weaving technology company, raised $32m in Series B funding led by DCVC, with Lowercarbon Capital, E12, Decathlon and SOSV also participating. axios.link/3WKJeYj

• Faye, a Newark, Del., travel insurance startup, raised $31.5m in Series B funding led by Portage, with Lumir Ventures, F2 Venture Capital, Viola Ventures and Munich Re Ventures also participating. axios.link/3Yq5FnV

🌎 Graphyte, a Dover, Del. carbon capture startup, raised $30m in Series A funding led by Prelude Ventures and Carbon Direct Capital, with Breakthrough Energy Ventures and Overture also participating. axios.link/4djLaxp

• Axiad, a Santa Clara, Calif., cybersecurity startup, raised $25m in funding from Invictus Growth Partners. axiad.com

• Credo AI, a Palo Alto, Calif., AI risk and compliance startup, raised $21m in from CrimsoNox Capital, Mozilla Ventures, FPV Ventures, Sands Capital, Decibel VC, Booz Allen Hamilton, and AI Fund also participating. credo.ai

• Zoe, a U.K. nutrition startup, raised $15m in additional Series B funding led by Coefficient Capital. axios.link/3SuJwBf

• Sybill, a Mountain View, Calif., sales automation startup, raised $11m in Series A funding led by Greycroft, with Neotribe Ventures, Powerhouse Ventures, and Uncorrelated Ventures also participating. sybill.ai

• Monto, an N.Y. payments and billing startup, raised $9m in seed funding led by Scale Venture Partners, with Verissimo Ventures, F2 Venture Capital, Firsthand Alliance and Room40 Ventures also participating. montopay.com

• Clutch Security, an Israeli cybersecurity startup, raised $8.5m in seed funding led by Lightspeed Venture Partners, with Merlin Ventures, and angel investors also participating. clutch.security

• Cartona, an Egyptian B2B e-commerce startup, raised $5.6m in additional Series A funding led by Algebra Ventures, with Silicon Badia, and SANAD Fund for MSME also participated. Camel Ventures and GlobalCorp provided $2.5m in debt. axios.link/4clASw1

• Bee AI, an SF AI wearable device maker, raised $7m in seed funding led by Exor, with Greycroft, New Wave VC, and Banana Capital also participating. axios.link/4cYXxPJ

• Hyperbolic, an SF provider of AI compute services, raised $7m in seed funding led by Polychain Capital and Lightspeed Faction, with Chapter One, LongHash, Bankless Ventures, Republic Digital, Nomad Capital, CoinSummer Labs, Third Earth Capital, Balaji Srinivasan, Illia Polosukhin, Sandeep Nailwal, Casey Caruso, Tekin Salimi, and Santiago Santos also participating. hyperbolic.xyz

• MarkOS, a Seattle brand asset management startup, raised $4m in pre-seed funding led by Ludlow Ventures and Bessemer Venture Partners, with Ascend, Breakers, Red Antler, Plug and Play, and Four Acres Capital also participating. axios.link/4fqrZUl

• Orchid, a Wilmington, Del., maker of AI note-taking software for clinicians, raised $1.5m from Y Combinator and strategic investors. orchid.health

• Stairpay, a U.K. shared home ownership startup, raised £750,000 in pre-seed funding led by Fuel Ventures, with Heartfelt Ventures, Rob Hamilton, Luke Appleby, and Paul Kempe also participating. stairpay.com

• Acieta, backed by Angeles Equity Partners, acquired Capital Industries, a Shelbyville, Ind., industrial robotics manufacturer and integrator. acieta.com

• Arctos Partners agreed to acquire a majority stake in Hayfin, a U.K. alternative asset management firm, from British Columbia Investment Management. hayfin.com

• Bain Capital Insurance invested in 1970 Group, a N.Y. specialized risk financing provider to the insurance industry. 1970group.com

• CORE Industrial Partners acquired a majority stake in Winky Lux, an N.Y. beauty company. winkylux.com

🚙 MiddleGround acquired a majority stake in Helix, a U designer and manufacturer of high-performance electric motors and inverters. ehelix.com

• Mollitiam Holdings acquired BluRoc, a Northampton, Mass., provider of road and other infrastructure, from Platinum Equity. bluroc.com

⛽️ Post Oak Energy Capital completed 10 acquisitions valued at $475m in total in 2024, primarily in the Permian Basin. postoakminerals.com

• Secur-Serv, a division of Transom Capital Group-backed Scantron Corp., completed its acquisition of C-Net Systems, a Shelby Township, Mich. managed service provider. secur.serv.com

• SK Capital Partners agreed to acquire the North America Composites & Fuel Containment division of Parker Hannifin (NYSE: PH). parker.com

• Vista Equity Partners is handing control of Pluralsight the company to lenders including Blue Owl Capital, Ares Management and BlackRock, which have agreed to exchange their debt for full ownership, per WSJ. axios.link/3A6gTUA

• Pershing Square USA, a closed-end fund led by Bill Ackman, seeks to raise $2b via IPO by selling 40m shares at $50. axios.link/3SpVj3K

• Canva acquired Leonardo.ai, an Australian generative AI content and research startup. axios.link/4c4WuML

🚙 Sennder agreed to acquire the European ground transportation assets of C.H. Robinson, an Eden Prairie, Minn., logistics company, in an all-cash deal. axios.link/46tjow0

• Vista Outdoor (NYSE: VSTO) has canceled its shareholder vote on a $2.15b deal to sell its ammunition division to Czechoslovak Group, will instead explore strategic alternatives. axios.link/4caa1CK

🚑 Amulet Capital Partners, a Greenwich, Conn., middle-market private equity firm focused on health care, raised $1.2b for its third fund. amuletcapital.com

• Arcmont Asset Management, a U.K. investment firm, is seeking to raise over €12b ($13b) for a new European direct-lending fund, per Bloomberg. axios.link/3Ym6T3p

• Conviction Partners, an SF venture firm focused on AI, is seeking to raise $230m for its second fund, per an SEC filing. axios.link/4ddTBKQ

• Siddhi Capital, a Cherry Hill, N.J., growth equity firm focused on the food and beverage industry, raised $135m for a second fund. axios.link/4fmpGSp

• Hunter Point Capital, an N.Y. alternatives investment firm, hired SD Chu as managing director and Akira Takahashi as senior advisor. hunterpointcapital.com

Nvidia's data center revenue has grown at a staggering pace within a couple of quarters after ChatGPT was released in late 2022.

By the numbers: On an annualized basis, in the above chart, it hit $90 billion last quarter.

• And that's after hovering below $20 billion for quite some until the third quarter of 2023.

ICYMI:

• AI's problem: The missing revenues
• How AI is driving the venture capital market