Venture Capital Turns to Hardware Bets as AI Threatens Software Companies - WSJ

Venture capital firms are increasing investments in AI hardware startups as software companies face declining revenue from AI-driven automation. The shift reflects growing capital allocation toward specialized AI chips and data center infrastructure. Firms are prioritizing companies building custom AI accelerators and high-performance computing systems. Investments are focused on startups developing silicon-based AI processors and low-latency inference platforms. This reallocation signals a strategic pivot in venture capital toward physical AI infrastructure. The move underscores rising competition between software and hardware AI ecosystems.