The Interconnect Thesis: Why the Wire Is the Constraint
Everyone models the AI buildout as chips and power. That is two-thirds of the stack. The third leg, the one that quietly gates the other two, is interconnect: the fiber, the subsea cable, and the switch fabric that move bits between and inside data centers. Compute you cannot connect is stranded capital. Power you cannot reach with fiber is a diesel generator. My read: network architecture is the under-tracked constraint on AI compute delivery, and the market prices it late. That lateness is where the return lives.
Knowledge check
Why does the author argue interconnect is a distinct layer of the AI infrastructure capital stack rather than a subcomponent of compute or power?
Show the answer
Because interconnect has its own capital cycle, ownership structure, and scarcity dynamics: it gates whether compute and power can actually be delivered to users, it is financed and owned differently (carriers, consortia, hyperscalers), and constraints in the wire strand otherwise-productive chips and megawatts.