The massive funding in private AI infrastructure validates the "picks and shovels" investment thesis for public companies like NVIDIA (NVDA) and Dell (DELL). Consider Shopify (SHOP) as it pioneers "conversational commerce" by enabling sales directly through AI chatbots, creating a significant new revenue channel. The geopolitical push to onshore critical mineral supply chains presents a long-term opportunity in companies like MP Materials (MP), which benefit from direct government support. Yelp's (YELP) strategic acquisition of an AI startup to automate customer interactions could enhance its platform and drive future subscription revenue. Finally, monitor the private markets, as the rapid growth of companies like ClickHouse signals increasing competition for public data firms like Snowflake (SNOW) and points to major future IPOs.

ClickHouse (Private)

• A database company focused on real-time analytics, competing with public companies like Snowflake (SNOW) and private company Databricks.
• Closed a $400 million Series D funding round led by Dragonair Investment Group.
• The new funding round values the company at $15 billion, a significant increase from its $6.35 billion valuation in May of the previous year.
• The company is experiencing rapid growth, with Annual Recurring Revenue (ARR) up more than 250% year-over-year.
• Serves over 3,000 customers, including major enterprises like Meta (META), Sony (SONY), and Tesla (TSLA).
• Recently acquired LangFuse, an open-source platform for monitoring Large Language Model (LLM) applications, indicating a strategic move into the AI space.

Takeaways

• ClickHouse's explosive growth and soaring valuation highlight the immense market demand for real-time data analytics.
• As a direct competitor to Snowflake (SNOW), its success in the private market could signal increasing competition in the public data cloud space.
• The significant valuation jump makes ClickHouse a prime candidate for a major Initial Public Offering (IPO) in the future. Investors interested in the data and analytics sector should keep this company on their radar.

Capital One (COF) & Brex (Private)

• Publicly traded financial services company Capital One (COF) has agreed to acquire FinTech company Brex for $5.15 billion.
• The deal structure is 50% cash and 50% stock.
• Brex, which provides corporate cards and expense management software, was valued at $12.3 billion in a 2022 funding round.
• The acquisition price represents a significant "down round," at less than half of Brex's peak valuation.

Takeaways

• This acquisition is a strategic move for Capital One (COF) to quickly integrate Brex's modern FinTech platform and corporate client base.
• The much lower acquisition price for Brex is a clear indicator of the market correction that has occurred in the FinTech sector since the highs of 2021-2022.
• For investors, this serves as a reminder that high private market valuations are not guaranteed and can be adjusted downwards based on market conditions.

AI Infrastructure & "Picks and Shovels" Plays

This podcast highlighted several private companies that provide the essential infrastructure and tools for the AI boom, representing "picks and shovels" investment opportunities.

• RunPod (Private):

  • An AI hosting platform providing GPU infrastructure for developers.
  • Has reached an impressive $120 million in annual run-rate revenue after initially bootstrapping.
  • Grew its developer base from 100,000 to 500,000 in about a year and a half.
  • Competes with hyperscalers like Amazon's AWS (AMZN), Microsoft (MSFT), and Google (GOOGL) by focusing on the developer niche.

• Baseten Labs (Private):

  • An "AI inference" company that helps other companies run large AI models efficiently.
  • Raised $300 million at a $5 billion valuation, more than doubling its valuation from a recent round.
  • The funding round was co-led by Google's Capital G (GOOGL) and included a $150 million investment from NVIDIA (NVDA).

• InfraRack (Private):

  • A new startup created by the team behind the popular open-source tool VLLM, which helps run AI models faster and cheaper.
  • Raised $150 million in seed funding at an $800 million valuation.

Takeaways

• The massive funding and rapid growth of companies like RunPod, Baseten, and InfraRack demonstrate the incredible demand for computing power and tools to build and deploy AI.
• NVIDIA's (NVDA) direct investment in Baseten shows its strategy of not just selling chips, but also investing in the ecosystem that drives demand for its hardware.
• These "picks and shovels" companies are critical to the AI industry's growth. While they are private, their success underscores the investment thesis for public companies involved in AI infrastructure, such as NVIDIA (NVDA), Dell (DELL), and cloud providers.

Yelp (YELP) & Hatch (Private)

• Yelp (YELP), the online business directory, is acquiring AI agent startup Hatch for $300 million.
• Hatch provides AI agents that can handle customer inquiries and book appointments for service professionals like plumbers and contractors.
• Hatch currently generates $25 million in Annual Recurring Revenue (ARR), which is growing at 70% year-over-year.
• The acquisition price is approximately 12 times Hatch's ARR.

Takeaways

• This is a strategic move by Yelp (YELP) to integrate AI directly into its platform, providing more value to the service professionals who are its core customers.
• By offering AI-powered tools, Yelp can enhance its subscription offerings and potentially increase revenue.
• This acquisition shows how established tech companies are using M&A to quickly adopt AI capabilities rather than building them from scratch.

Shopify (SHOP)

• Shopify (SHOP) is enabling merchants to sell products directly through AI chatbots like ChatGPT, Google's Gemini, and Microsoft's Copilot.
• For sales made through ChatGPT, merchants will pay OpenAI a 4% fee, in addition to Shopify's standard fees.
• Shopify reports that AI-driven traffic to its merchants' stores has increased 7x year-over-year.

Takeaways

• Shopify is positioning itself at the forefront of "conversational commerce," a new frontier where customers discover and buy products through AI chats.
• This move opens up a new sales channel for millions of merchants on the Shopify platform, potentially boosting their sales and, in turn, Shopify's revenue.
• This is a key example of how AI is creating new business models and revenue streams, with companies like OpenAI now able to take a direct cut of e-commerce transactions.

Novion Magnetics (Private) & The Critical Minerals Theme

• Novion Magnetics is a U.S.-based maker of rare earth magnets, which are critical for defense, data centers, and electric vehicles.
• The company raised $215 million to scale up production.
• The goal is to address the heavy reliance on China, which currently supplies 92% of the world's rare earth magnets.
• The U.S. government is actively supporting this industry through grants and investments in companies like MP Materials (MP), which is publicly traded.

Takeaways

• This is a strong geopolitical investment theme focused on de-risking supply chains and bolstering national security.
• Companies in the domestic critical minerals and materials space, like Novion and the public company MP Materials (MP), are direct beneficiaries of government policy and funding.
• This trend represents a long-term investment opportunity in the reshoring of critical manufacturing capabilities to the United States.

Zipline (Private)

• A drone delivery and logistics company that started by delivering medical supplies in Rwanda.
• Raised over $600 million in a new funding round, valuing the company at $7.6 billion. This is up from a $5 billion valuation in 2024.
• The company has completed over 2 million commercial deliveries and is expanding rapidly in the U.S.
• U.S. partnerships include major brands like Walmart (WMT) and Chipotle (CMG).

Takeaways

• Zipline's significant funding and valuation growth indicate strong investor confidence in the future of autonomous logistics and drone delivery.
• The expansion from niche medical delivery to mainstream retail and food with partners like Walmart (WMT) shows that the technology and business model are maturing.
• Zipline is a leader in a new and growing industry and is another company to watch for a potential future IPO.