AI: Value or Just Valuations

Author

Nicole Rojas
July 13, 2026

 

Welcome to AlphaInsights, 8alpha.ai’s weekly newsletter, your ultimate source for curated insights and key updates from the dynamic world of venture capital!

From billion-dollar rounds to market-defining shifts, we deliver the intelligence powering the global investment landscape, moving investors and innovators forward. At 8alpha.ai, we’re not waiting for the future of capital, we’re building it. Stay sharp, stay curious, and stay ahead.

STARTUPS

ROUNDS AND UNICORNS

  1. Keyfactor (Cybersecurity): Raised $1 billion in a private equity round led by Summit Partners. The company provides digital identity and machine identity management software, bringing total funding to $1.21 billion

  2. SambaNova (AI Infrastructure): Raised a $1 billion Series F at an $11 billion valuation, led by General Atlantic. The company develops AI chips and enterprise AI infrastructure, with total funding nearing $2.5 billion

  3. Oratomic (Quantum Computing): Raised a $300 million Series A co-led by Arch Venture Partners, Khosla Ventures, and Spark Capital. The startup is developing next-generation quantum hardware based on neutral-atom technology

  4. Quaise Energy (Clean Energy): Secured a $134 million Series B led by Prelude Ventures. The company is developing deep geothermal drilling technology, bringing total funding to $225 million

  5. Prime Intellect (Artificial Intelligence): Raised a $130 million Series A led by Radical Ventures. The company is building a distributed platform for training and deploying AI models, bringing total funding to $200.4 million

North American venture funding reached a record $392 billion in the first half of 2026, driven by unprecedented AI investment and a surge in late-stage megadeals. Q2 alone generated $137.2 billion, the second-highest quarter on record, with 80% of all funding going to AI startups. Capital remained highly concentrated, led by Anthropic's $65 billion financing at a $965 billion valuation, while early-stage funding nearly doubled year over year to $31 billion, supported by large AI rounds such as Prometheus' $12 billion raise

  • The AI boom also fueled a record exit environment, including SpaceX's $75 billion IPO, the largest ever, and its $60 billion acquisition of Cursor, the biggest startup acquisition on record

  • With OpenAI and Anthropic preparing IPOs near $1 trillion, investors expect AI to continue driving venture funding and exits

 

California continues to dominate the U.S. venture capital market, attracting more than $335 billion in funding in 2026, roughly 10 times more than New York and 40 times more than Texas, driven largely by the AI boom. In Q2, 1,087 California startups raised $108.8 billion, with 75% of that capital going to just three companies: Anthropic ($65 billion), Project Prometheus, and Anduril ($5 billion)

  • Southern California also emerged as a major innovation hub, raising nearly $8 billion across 207 deals, led by space and defense companies such as Impulse Space

  • However, nearly 90% of all venture funding is now flowing to AI companies, making fundraising increasingly difficult for non-AI startups

  • As a result, future returns are becoming increasingly concentrated among a handful of AI leaders, including Anthropic, OpenAI, and SpaceX

ECONOMIC SNAPSHOT

Apple has sued OpenAI, accusing the company of systematically stealing trade secrets to accelerate its entry into AI hardware. The lawsuit alleges that former Apple executives, including Chief Hardware Officer Tang Tan (who spent 24 years at Apple), recruited Apple employees using confidential project information, encouraged candidates to bring proprietary hardware and designs to interviews, and obtained details about unreleased products

  • Apple also alleges former engineer Chang Liu left the company with confidential technical documents

  • The lawsuit comes as OpenAI expands into hardware following its $6.5 billion acquisition of Jony Ive’s startup io, and reports of an AI-powered smartphone

  • Apple is seeking to block OpenAI from using its alleged trade secrets and recover confidential materials

President Donald Trump has increasingly used the stock market as a key measure of his administration's economic success, highlighting a $15 trillion increase in U.S. market value since returning to office and promoting initiatives such as Trump Accounts and Trump IRAs to expand household participation in investing. However, economists caution that stock market gains disproportionately benefit wealthier Americans:

  • The top 1% own more than half of all U.S. equities, while roughly 40% of Americans own no stocks

  • Critics argue that focusing on Wall Street overlooks broader concerns such as wages and affordability

  • The U.S. economy grew 2.1% in 2025, while average hourly wages rose 3.5%, still trailing recent inflation

U.S. companies continue to pass tariff costs on to consumers as trade policy uncertainty persists. According to the New York Federal Reserve, 47% of service firms and 44% of manufacturers plan additional price increases, with roughly one-third expecting to raise prices within the next six months. Research suggests tariffs have already pushed core inflation to 3.2%, about 0.8 percentage points higher than it would have been otherwise

  • The Tax Foundation estimates tariffs will cost the average U.S. household about $700 in 2026, following an estimated $1,000 impact in 2025

  • Economists also note that tariff-driven price increases are likely to continue gradually, as businesses adjust prices over several months rather than all at once

AI is increasingly driving U.S. economic growth while widening income inequality. The economy expanded at an annualized 2.1% in the first quarter of 2026, largely fueled by AI-related business investment, yet lower-income households continue to face weak wage growth, higher living costs, and declining consumer sentiment. In cities such as San Francisco, where AI companies have attracted billions of dollars in investment, rising housing costs have increased financial pressure, with one local food pantry reporting demand up 10% and more than 200 people on its waitlist

  • Meanwhile, the wealthiest 10% of Americans now account for 62% of consumer spending growth

  • AI investment has also become increasingly concentrated, with San Francisco companies receiving nearly two-thirds of global AI funding

  • Economists also note that, excluding AI, U.S. business investment would be declining, highlighting the technology's growing role in supporting overall economic growth

Debt financing for AI infrastructure is accelerating rapidly in 2026 as companies raise capital to fund data centers and AI expansion. Through early July, AI-related issuance reached $218 billion in investment-grade bonds, already nearly 3x the $80.5 billion raised in all of 2025, while AI-related high-yield bond issuance climbed to $31.9 billion, compared with just $14.1 billion during all of 2025

  • Major financings include Amazon's $25 billion bond offering, QTS's $2 billion debt package, and CoreWeave's $3.1 billion loan

  • However, signs of investor fatigue are emerging as several recent AI bond issuances have fallen below par

  • The weakness reflects concerns over rising leverage, heavy AI spending, and intensifying competition

 

Meta significantly expanded its Hyperion AI data center project in Louisiana, increasing the planned investment from $27 billion to more than $50 billion and scaling the facility from 2 GW to 5 GW, making it the company's largest AI data center. The expansion is supported by Louisiana's 20-year sales tax exemption for new data centers and reflects Meta's broader multibillion-dollar AI infrastructure strategy

  • Meta will invest over $1 billion in local infrastructure and has already awarded $1.6 billion in local contracts

  • Hyperion is expected to reach 2 GW by 2030 and eventually scale to 5 GW

IPOs & EXITS

Global M&A activity reached $1.3 trillion in Q2 2026, up 35.3% year over year, driven by a small number of megadeals despite relatively flat deal volume. Major transactions included the $118.5 billion NextEra Energy–Dominion Energy merger and SpaceX's $60 billion acquisition of Cursor, while valuation multiples remained stable at a median 10.2x EV/EBITDA

  • Strategic buyers replaced private equity as higher interest rates pushed buyout value down 35.7% quarter over quarter

  • Meanwhile, a friendlier regulatory environment supported large corporate deals, particularly in technology, energy, and industrials

 

Anduril is in no rush to go public, with CEO Brian Schimpf warning that current AI and defense technology valuations may be unsustainably high. The company, which develops AI-powered drones and autonomous defense systems, doubled its valuation to $61 billion in May as U.S. defense spending heads toward $1.5 trillion. Schimpf said Anduril's priority is long-term value creation rather than capitalizing on short-term market enthusiasm, noting that a successful IPO should generate strong returns years after listing

  • His comments reflect broader concerns about the AI IPO market, particularly as OpenAI and Anthropic prepare potential listings at valuations approaching $1 trillion

  • Investors are increasingly questioning whether those valuations can hold once the companies enter the public markets

 

OpenAI has promoted co-founder Greg Brockman to oversee its core product and commercial operations after President Fidji Simo stepped down due to chronic illness. Brockman will now lead ChatGPT, enterprise sales, go-to-market teams, and compute initiatives, placing him at the center of efforts to grow revenue and support OpenAI's $852 billion valuation ahead of its anticipated IPO

  • The leadership change comes as OpenAI faces intensifying competition from Anthropic, Google, SpaceX, and lower-cost Chinese AI models

  • ChatGPT's market share fell below 50% for the first time in March, prompting the company to accelerate products such as its AI coding assistant, Codex

 

SK Hynix completed the largest U.S. IPO ever by a foreign company, raising $26.5 billion at $149 per share, surpassing Alibaba's $25 billion listing in 2014. The offering highlights continued investor enthusiasm for AI infrastructure, as soaring demand for memory chips has driven SK Hynix and Samsung to $1 trillion valuations and helped make South Korea the world’s seventh-largest stock market

  • The company will use the proceeds to expand chip manufacturing, while South Korea has committed over $500 billion to new facilities

  • However, analysts warn that high valuations, record retail leverage, and the industry's cyclical nature are increasing risks

  • If AI earnings disappoint, those conditions could trigger a broader market correction

8ALPHA.AI HIGHLIGHT

What a great evening at the Seattle Chapter: Startup Pitch Competition!

A huge thank you to everyone who joined us and helped make the event such a success. It was great to see founders, investors, operators, and community members come together to support and strengthen the Seattle startup ecosystem.

To the founders who took the stage, thank you for sharing your vision, your hard work, and the companies you're building. And to our judges, thank you for your time, expertise, and thoughtful feedback.

Congratulations to Cameron McCann and the team at Q-Immune for taking home the win!

A special thank you to our fellow hosts, LaFamilia Foundation and Awana, and to our sponsors Silicon Valley Bank, Hal9, Microsoft, Carta, and Perkins Coie for helping make this event possible.

We hope this was more than just a competition. We hope it sparked new conversations, meaningful connections, and future collaborations across the Seattle startup ecosystem.

Looking forward to seeing what comes next.

The Venture Model Is Broken. What Comes Next?

99% of deals don’t matter.

In Q1 2026, nearly $200B went into just five companies, with ~89% of deal value concentrated in AI.

At the same time:

  • Fund formation has dropped sharply

  • Exit activity remains limited

  • Liquidity is concentrated in a handful of large outcomes

From the outside, it looks like venture capital is back. But underneath, the reality is very different.

Fewer funds are being raised

Liquidity is still tight

And for most companies, access to capital hasn’t improved

This isn’t just a cycle, it’s a structural shift in how capital is allocated.

Watch Nicole Rojas, Head of Investment Operations at 8alpha.ai, break it down in our latest State of VC update. Explore funding and learn more at 8alpha.ai.

State of VC Report: The AI Power Law

“Every technological revolution has two halves: the bubble and the golden age that follows.”

Carlota Perez, economist and author of Technological Revolutions and Financial Capital (2002)

The stock market is at all-time highs, but inflation remains sticky and the job market is weakening. Ask around and you’ll hear the same refrain: the labor market feels tougher than ever. At the same time, the first wave of AI agents is “joining the workforce”. Imagine a software engineering agent capable of performing most tasks of a mid-level developer. Now imagine thousands. Extend that across every knowledge field, and the implications for productivity, and potential displacement, are profound.

What happens when the next round of layoffs hits? Add tariffs on top, and ask what happens if consumption weakens. Even the Federal Reserve admits it is unsure of what comes next.

Against this backdrop, venture capital in 2025 is not in recovery but in recalibration. The illusion of recovery is powered almost entirely by AI. Capital is flowing, but to fewer companies than ever. Outside AI, down rounds are rising, and nearly half the unicorn population hasn’t raised since 2022.

We are living in an AI bubble. Just four mega caps, Nvidia, Meta, Microsoft, and Broadcom, accounted for 60% of the S&P 500’s gains, with Nvidia alone responsible for more than a quarter. It’s a paradox. Yes, we’re in a bubble, but it’s also the future. We are witnessing what may be the most important technological shift in a generation. It’s hype layered on top of something undeniably real.

Uncertainty is the name of the game; not one single path forward, but divergent scenarios. Alpha will be earned through selectivity, by navigating volatility rather than avoiding it.

8alpha.ai is an AI fintech transforming cash-generating businesses into scalable, AI-powered companies. We provide revenue-based financing and hands-on AI transformation, delivering no zeros with unlimited upside. We’re the architects building financial infrastructure for the next generation of investors and startups.

Become part of our revolution.

Happy reading,

8alpha.ai’s Research & Investment Team