Andreessen Horowitz launches $1.1bn fund for AI physical infrastructure

Andreessen Horowitz (a16z) has launched the ‘Machine Age Fund’, a $1.1 billion vehicle dedicated to investing in the physical infrastructure required for artificial intelligence. This move signals a strategic shift for the venture capital firm, moving focus from software toward the hardware and physical layers that support AI operations.

The fund’s mandate covers a broad spectrum of the AI stack, including computer chips, memory, networking, storage, and data centers. It also extends to robotics and home AI appliances. The investment thesis is driven by the increasing physical demands of AI, such as rising compute density and the massive power requirements of modern data centers, which are transitioning from megawatt to gigawatt scales.

By targeting the ‘steel and concrete’ of AI, a16z aims to address bottlenecks in the supply chain and the physical limits of current systems. The firm noted that hardware now accounts for more than 20% of its deal flow, reflecting a broader industry trend where the primary constraints on AI growth are shifting from algorithmic models to physical infrastructure and energy availability.