Volpe compares AI infrastructure build-out to 1990s fiber boom
Hanabi Capital’s Mike Volpe argues that current AI investment is more substantial than the late 1990s fiber optic surge. He predicts a market correction will occur, but asserts that the underlying compute assets will remain fully utilized.
Mike Volpe, a former Cisco executive and general partner at Hanabi Capital, has drawn parallels between the current AI infrastructure build-out and the late 1990s fiber optic boom. Volpe notes that while the 1990s saw a surge in capital for connectivity, today’s investment in AI infrastructure represents approximately 2% of GDP, a significantly larger proportional commitment. He argues that the practical applicability of AI is higher than that of early network bandwidth, pointing to the superior revenue growth rates of providers such as Anthropic, OpenAI, and inference platforms like Fireworks, Together, and Modal. Volpe predicts an economic correction similar to the dot-com bust, where debt-saddled companies may fail, but he believes the underlying compute assets will remain useful for a long period. Unlike fiber, which has a useful life of 20 to 30 years, the lifespan of GPUs is being extended by improvements in AI software efficiency. For instance, H100s, originally expected to have a five-year life, are still renting at higher rates than anticipated due to persistent scarcity in semiconductor manufacturing. Volpe maintains that the infrastructure will be fully utilized, though ownership may shift to different entities following the correction.