a16z Closes $1.1B AI Hardware Fund

Andreessen Horowitz (a16z) has closed its $1.1 billion Machine Age Fund, advancing an investment push first announced around growing AI infrastructure constraints. The AI hardware fund will target semiconductors, memory, networking, storage, data centres, power systems and robotics. Partners Ben Horowitz, Martin Casado, Raghu Raghuram, David Ulevitch and David George will manage the vehicle, with former VMware chief executive Raghu Raghuram adding infrastructure expertise. The fund reflects rapidly rising AI computing demand. Hyperscalers could spend about $700 billion on capital expenditure this year and more than $1 trillion next year, while some key components are reportedly booked through 2028. Memory orders may already require roughly three years of production to fulfil. The shift from chatbots to reasoning models and AI agents could increase annual token demand by nearly 1,000%, as agents use thousands of tokens per task. Power and cooling are also major bottlenecks. New AI data centres could need 44 gigawatts of additional electricity by 2028, compared with an expected 25GW of new grid supply. Some server racks now require more than 1 megawatt, increasing demand for liquid cooling, high-voltage systems and specialised construction. Hardware-focused opportunities now represent more than 20–30% of leading founder deals, compared with about 3–5% previously. The AI hardware fund is separate from a16z’s $15 billion fundraising announced in January 2026. On 31 August, the firm also expanded its fifth Growth fund to $8.5 billion, taking total Growth fundraising above $24 billion across five funds and more than 100 backed companies. For crypto traders, the announcement is a long-term signal for data centres, semiconductor supply chains, electricity infrastructure and potentially decentralised computing, storage and data services. However, it includes no token investment or crypto partnership, so the immediate impact on cryptocurrency prices is likely limited.