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Hong Hao and Lars Tvede Release AI Capital Flows Report
Hong Hao and Lars Tvede's AI capital flows report shows compute scarcity and physical resources as key to future AI wealth.
In brief
Hong Hao and Lars Tvede's AI capital flows report shows compute scarcity and physical resources as key to future AI wealth. AI companies received $242 billion of $300 billion global venture capital in Q1 2026, with scarcity of compute and physical resources driving future wealth. Originally reported by BigGo Finance.
Hong Hao and Lars Tvede Release AI Capital Flows Report
Renowned economist Hong Hao and Lars Tvede, author of "The Business Cycle," jointly released a report tracking capital flows through the artificial intelligence supply chain.
Global Venture Capital in Q1 2026
Citing data, the report says global venture capital totaled about $300 billion in the first quarter of 2026, with AI companies receiving roughly $242 billion, or about 80%.
AI Inference Demand Growth
On the demand side, estimates from Epoch AI show that AI inference demand is growing about 10-fold annually at current prices.
AI Inference Supply Growth
Global inference supply, measured by the number of tokens ultimately reaching users, is growing only about 3.4-fold a year.
Advanced Packaging Capacity
The report specifically notes that advanced packaging capacity is effectively sold out through the end of 2027.
AI Profit Pool Migration Stages
The report breaks the migration of the AI profit pool into five sequential stages: compute scarcity, intelligence commercialization, embodied intelligence, autonomous enterprises, and ubiquitous intelligence.
Smart Money Focus
The report argues that "smart money" is most bullish on the two poles of scarce physical resources and the application layer.
“smart money is most bullish on the two poles of scarce physical resources and the application layer”
AI Wealth Creation
The greatest wealth in the AI era will come from combining cheap intelligence with genuinely scarce resources.
“the greatest wealth in the ai era will come from combining cheap intelligence with genuinely scarce resources”
OpenAI Funding Rounds
OpenAI completed a funding round with total committed capital of $122 billion, while Anthropic and xAI completed $30 billion Series G and $20 billion Series E rounds, respectively.
Cloud Service Providers
An August forecast from TrendForce projected that combined capital expenditure by the world's nine largest cloud service providers will grow about 90% year-on-year in 2026 to more than $886.7 billion.
Bottleneck Analysis
The report notes that if this estimate is broadly accurate, demand is growing at nearly three times the pace of supply, creating an interconnected chain of bottlenecks.
AI Profit Pool Stages Timeline
The migration of the AI profit pool begins in 2026 with compute scarcity, followed by intelligence commercialization around 2028, embodied intelligence around 2.029, autonomous enterprises around 2030, and ubiquitous intelligence around 2035.
Investment Momentum
The most prominent investment momentum is robotics and physical AI with a momentum index of 1.73, meaning related investment activity is expanding significantly faster than the overall venture capital market.
Investor Attention Distribution
AI applications and agents account for 25% of all investor attention, roughly twice that of the second-ranked category.
The bottom line
AI companies received $242 billion of $300 billion global venture capital in Q1 2026, with scarcity of compute and physical resources driving future wealth.
