Paul Graham: Investors Are Flooding Hard Tech Because They're Afraid AI Will 'Eat All Software'

Y Combinator's co-founder says the venture capital flight to hard tech startups is driven by a specific fear: that AI will commoditize software so thoroughly that only atoms-based businesses offer durable moats.

Paul Graham offered a characteristically blunt explanation for the surge in hard tech venture funding: investors are scrambling toward physical-world startups because they believe AI will commoditize software businesses into oblivion, as he posted. The observation dovetails with visible infrastructure buildouts — including desert data centers running on solar power that @iamaimaimami documented — suggesting the capital shift is already well underway.

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