The Trillion-Dollar AI Race

Author

Nicole Rojas
May 26, 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. MiRus (Healthcare): Raised $1.5B in funding led by Boston Scientific, which acquired a 34% stake. The orthopedic and spinal technology company has now raised $1.6B total

  2. Hark (AI): Secured a $700M Series A led by Parkway Venture Capital, with backing from Nvidia, Intel Capital, AMD, Qualcomm Ventures, ARK, and Salesforce Ventures. The startup is developing personalized AI and next-generation hardware

  3. Modal Labs (AI Infrastructure): Raised $355M at a $4.65B valuation. The company’s ARR reportedly surged from $60M to $300M since September as enterprise AI coding adoption accelerated

  4. Decart (AI): Raised $300M at a nearly $4B valuation. The frontier AI startup has now raised roughly $456M total, with backing from Benchmark, Sequoia, Nvidia, and Andrej Karpathy

  5. Amca (Aerospace & Defense): Raised $300M Series B at a valuation above $1B. The company focuses on aerospace manufacturing and supply-chain technologies and has raised $376.5M overall

Capital concentration in venture capital continues accelerating, with funding increasingly flowing to a small group of dominant private companies. In 2025, 70% of all U.S. venture funding, more than $200B, went to just 389 companies raising rounds above $100M, while $90B flowed to only six companies that each raised more than $5B. By comparison, roughly 6,000 startups split the remaining $88B in funding

  • The trend intensified further in 2026, with 80% of U.S. startup investment through April going to rounds above $500M across just 29 companies

  • While smaller startups still saw modest funding growth overall, capital is becoming increasingly concentrated among a small group of frontier AI companies

  • Investors are now debating whether the dominance of companies like OpenAI and Anthropic will crowd out smaller startups or create new opportunities across the broader AI ecosystem

 

ECONOMIC SNAPSHOT

The U.S. economy remains resilient despite rising pressure from the Iran war, elevated energy prices, and weakening consumer sentiment. Oil and gas prices have climbed to four-year highs, helping push inflation to 3.8%, its highest level in three years, while average gasoline prices rose above $4.50 per gallon. Inflation has now outpaced wage growth for the first time since 2023, effectively erasing real pay gains for many households. Despite that pressure, broader economic indicators have remained relatively stable:

  • Unemployment stayed near 4.3%, job growth remained strong, and retail spending continued rising, with core retail sales up nearly 0.5% in April

  • Rising costs are also spreading across the economy, with food prices up 3.2% year-over-year and airfares jumping 20.7%

  • Higher Treasury yields are increasing pressure on mortgages and housing affordability, while inflation continues hitting lower-income households hardest

 

Federal Reserve economists are warning that the U.S.’s long-standing financial advantage as a global debtor is weakening as foreign ownership of American assets continues rising. Overseas investors now hold nearly $69T in U.S. assets, compared to $41T in foreign assets owned by Americans, leaving the U.S. with a negative international investment position of roughly $28T. For years, the U.S. offset that imbalance because American investors earned higher returns abroad, generating a net investment income surplus of $260B in 2019

  • However, that advantage has largely disappeared over the past two years as rising interest rates, higher foreign ownership of U.S. stocks, and persistent trade deficits increased capital outflows

  • Since 2019, the U.S. international deficit has worsened by roughly $16T, while foreign investors now own about 18% of the U.S. stock market

  • Higher interest rates are increasing payments flowing overseas, with the Fed estimating that every 1-point rate increase reduces U.S. net income by roughly $150B

 

U.S. consumers are facing growing financial pressure as tax-refund benefits fade and higher fuel prices linked to the Iran conflict continue pushing inflation higher. Tax refunds averaging nearly $3,500 helped support spending earlier this year, but economists warn those gains are being offset by rising gasoline and diesel costs after oil disruptions in the Strait of Hormuz pushed fuel prices up roughly 50%. Consumer sentiment has also weakened sharply, with surveys showing growing concerns about inflation, personal finances, and rising debt delinquencies across credit cards, auto loans, and student loans

  • Consumers account for about two-thirds of U.S. economic activity, making any slowdown in spending a major economic risk

  • Retail sales still rose 4.9% year-over-year in April, but much of the growth came from higher-income households, which benefited more from recent tax cuts and are less exposed to fuel costs

  • At the same time, inflation is once again outpacing wage growth, while grocery prices rose 2.9% and fruit and vegetable prices increased 6.1%

IPOs & EXITS

 

Mega IPOs from companies like SpaceX and OpenAI are raising concerns that the AI-driven stock-market rally may be approaching bubble-like levels of concentration. Technology companies already account for more than 44% of the S&P 500, and Bank of America estimates that upcoming AI IPOs could push market concentration toward 48%, exceeding levels seen during the dot-com bubble, Japan’s 1980s boom, and the Nifty Fifty era

  • Analysts warn that market performance is becoming increasingly dependent on a small group of AI companies

  • Rising Treasury yields and inflation are also pressuring high-growth valuations, with Bank of America noting that surging bond yields have historically preceded major market slowdowns

  • The firm also warned that extreme investor optimism could increase the risk of a broader market pullback if rates and inflation keep rising

 

OpenAI is reportedly preparing for a potential IPO that could value the company at up to $1T, potentially making it one of the largest public listings in history shortly after SpaceX’s expected IPO. Despite generating nearly $6B in Q1 revenue, OpenAI remains heavily unprofitable as it continues spending aggressively on data centers, chips, cloud infrastructure, and AI talent

  • Investors are expected to closely examine the company’s cash burn, profitability timeline, revenue mix, and the economics of serving AI models at scale

  • The filing could also reveal more about OpenAI’s ownership structure, including Microsoft’s roughly 27% stake, which could be worth around $270B at a trillion-dollar valuation

  • Analysts view the IPO as a major test of whether public markets are willing to continue financing the enormous capital demands of frontier AI companies

 

SpaceX’s IPO highlights how the company has evolved beyond rockets into a broader technology and infrastructure business spanning satellite internet, AI, telecommunications, lunar missions, and long-term Mars ambitions. Investors are closely focused on Starship, where SpaceX has already invested roughly $15B, including $3B in R&D during 2025, as the rocket is central to future Starlink expansion, NASA lunar missions, and potential space-based AI infrastructure

  • Meanwhile, Starlink has become the company’s main profit engine, generating $11.4B in 2025 revenue and $4.4B in operating income, while serving roughly 7.4 million devices monthly across about 30 countries

  • The IPO filing also revealed the growing role of AI through xAI and X, which generated $3.2B in AI revenue but posted a $6.4B operating loss alongside $12.7B in capital expenditures

  • Analysts view the IPO as a major test of whether markets are willing to finance Musk’s increasingly capital-intensive vision across space, connectivity, and AI infrastructure

 

SpaceX’s IPO filing revealed that the company is increasingly positioning itself as an AI infrastructure business rather than just a space company. An earlier draft of the filing reportedly showed that SpaceX built its first Colossus II AI clusters at roughly $2.7M per megawatt, far below typical industry costs, while a disclosed $15B annual compute contract with Anthropic through 2029 suggests the company could recover AI infrastructure costs extremely quickly

  • AI represented 47% of segment-specific language in the filing and accounted for 93% of SpaceX’s stated $28.5T market opportunity

  • However, the company still relies heavily on Starlink, which generated 61% of revenue and nearly all free cash flow in 2025 with a 63% EBITDA margin

  • The AI division generated just 6.7% of revenue and posted a $14B free-cash-flow loss in 2025

 

8ALPHA.AI HIGHLIGHT

Join us for the launch of the LaFamilia Seattle Chapter on June 18th at 5:30PM, bringing together founders, investors, and operators from across the tech ecosystem.

As we kick off the Seattle chapter, we’re excited to create a space for ambitious builders and supporters of the startup community to connect, collaborate, and discover the next generation of emerging startups.

The evening will feature a live startup pitch competition, where five selected early-stage startups will pitch their ideas in front of investors and the community. Founders will compete for a winner’s prize, investor visibility, and the opportunity to connect with people who can help accelerate their growth.

Whether you’re actively building, investing, scouting new ideas, or simply curious about the startup ecosystem, this is a great opportunity to meet ambitious people and discover exciting companies early.

Expect:

  • Live startup pitches from selected founders

  • Networking with top investors, angels, and operators

  • Food, drinks, and casual conversations

  • A relaxed evening with the Seattle startup community

📍 Seattle
🗓 June 18th
⏰ 5:30 PM (PDT)

Interested in pitching your startup? Apply here.

Powered by Awana, Alpha Impact 8 Ventures, SVB, hal9, and LaFamilia.

Register here to receive the full address and event details.

We’d love to see you there.

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