Summary

My guest today is Gavin Baker, founding partner and CIO of Atreides Management. This is our seventh conversation, and just two months after Gavin's last appearance. It's about the gap between what the market is doing and what companies are seeing. It's been a tough month or so for public AI names, but there's no sign of a slowdown on the ground in Silicon…

Key takeaways

• GPU spot prices have risen 50-60% in six to seven months as contracted compute reprices higher, contradicting bearish narratives—every quantitative demand signal (token growth, GPU rental pricing, DRAM spot prices) is accelerating, not decelerating.
• Open-source model adoption does not reduce compute demand; it merely shifts tokens from high-margin frontier models to lower-margin open-source tokens, while the underlying GPU compute hours consumed remain the same or increase due to price elasticity.
• Hyperscaler operating cash flow (not free cash flow) accelerated from 28% to 32-35% growth this quarter, suggesting the AI infrastructure buildout can increasingly be self-funded without relying on credit markets—the key variable that would make the capital cycle dangerous.

Why this matters

For B2B investors and technology executives, the divergence between deteriorating public market sentiment and accelerating private-market AI demand fundamentals represents a potential mispricing of AI infrastructure assets, with compute repricing dynamics and operating cash flow acceleration likely to resolve credit concerns before a debt-fueled capital cycle correction can materialize.

Entities

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Show notes

My guest today is Gavin Baker, founding partner and CIO of Atreides Management. This is our seventh conversation, and just two months after Gavin's last appearance. It's about the gap between what the market is doing and what companies are seeing. It's been a tough month or so for public AI names, but there's no sign of a slowdown on the ground in Silicon Valley. We discuss the latest moves, contracted vs. spot GPU prices, the game theory of memory supply agreements, and why Claude has become th

Themes

• anthropic
• investing