Andreessen Horowitz has announced a one-point-one-billion-dollar dedicated fund targeting the physical layer of AI infrastructure: chips, memory, data centres, cooling systems, electrical infrastructure, real estate, and robotics. The fund represents a material shift in the firm's investment posture, which has been primarily oriented toward software and consumer applications since its founding. The framing — AI as a "social and national imperative" and a "machine age" requiring physical build-out — reflects the firm's view that software-layer AI returns are narrowing as models commoditise and that the next decade of compounding returns lies in the capital-intensive infrastructure beneath. At one point one billion dollars, this is the largest single VC fund explicitly targeting AI physical infrastructure announced to date. The allocation pattern it signals will influence what gets funded across the venture industry: firms that follow a16z's lead accelerate a capital rotation that the $400 billion in AI-related debt financing raised globally in 2026 suggests is already substantially underway in credit markets.