"As we wind down 2025, I'm doing what just about everyone else is doing-thinking about 2026. For the private markets, this means thinking about more AI, all the time. That said, I do think next year the rubber is going to meet the road for AI startups and giants alike. High compute costs, compressed margins, and soaring valuations and expectations will inevitably collide with reality. And for some, this will mean even more acquisitions and more acquihires than perhaps we've seen so far in the AI boom."
"To unlock 'real world' AI like robotics, autonomous vehicles, smart factories, spatial computing, and embodied AI, tech giants need models that can reason about the real world in real time. Startups like Wayve, Physical Intelligence, WorldLabs, Bedrock Robotics, The Bot Company and GenesisAI, are already building simulation engines, sensor fusion stacks, and world models that learn from physical interaction-capabilities that would take incumbents years to replicate internally."
High compute costs, compressed margins, and soaring valuations will pressure AI startups and large tech companies in 2026, pushing economics to collide with operational reality. Many startups will become acquisition or acquihire targets as firms seek to control costs and capture specialized capabilities. Tech giants aiming to unlock robotics, autonomous vehicles, smart factories, spatial computing, and embodied AI will target teams building simulation engines, sensor-fusion stacks, and world models that learn from physical interaction. Some large AI players may acquire boutique financial firms to train domain-specific models. Foundation-model companies are likely to buy application-layer businesses with proven product-market fit, especially coding and enterprise AI tools.
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