TechCheck Startup Losses Fuel AI Boom 11/14/25
Nov 14, 2025
The discussion delves into how losses from private AI startups are ironically fueling a public AI boom. Each dollar burned on compute by these startups translates into revenue for tech giants like Microsoft and Amazon. Key players such as OpenAI and Anthropic are highlighted for driving massive compute spending. The movement of funds between SoftBank and these startups showcases a circular economy in AI. Concerns arise about the potential impact a pullback in private funding could have on the public AI landscape.
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Private Losses Fuel Public Profits
- Private startup losses are effectively funding public mega-cap AI profits by buying compute and services from them.
- That creates a cyclical flow where burned capital in private markets inflates public earnings for firms like Microsoft and NVIDIA.
Cursor As A Case Study
- Cursor illustrates the dynamic: it's valued near $30 billion with about $1 billion in annualized revenue.
- Cursor spends millions on model services like Anthropic's cloud, which pays big tech for compute upstream.
Earnings Shine Because Startups Burn
- The cycle makes mega-cap earnings look stronger while depending on private capital that may be unsustainable.
- If private funding and startup spending reverse, the public AI earnings narrative could quickly weaken.