Rohan Paul

Fed hikes rates for first time in 3 years on elevated inflation and made new debt-financed GPU clusters slightly harder to justify. Neoclouds and data-center startups are especially exposed because they finance GPUs, buildings, power, and networking before those assets reach profitable use. That rate hike raises the return available on short-term money, so long-duration AI projects must clear a higher financing bar. A seed-stage software startup will not see its equity round mechanically reprice by 25 bp, but infrastructure-heavy AI companies feel the move more directly. For Nvidia, this higher rates make Nvidia's backing and guarantee more valuable and give Nvidia greater influence over which infrastructure companies can keep expanding.