Enterprise Weekly #509: Tariffs' Impact on AI & Software Budgets
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Tariffs rocked the market this week. There are a lot of questions on its impact to the enterprise ecosystem, but there are already some concerns bubbling to the surface on the global AI arms race and software budgets.
We’ve written before about the staggering CapEx investments from Meta, Google, and others as they scale AI infrastructure — and the immense compute required by labs like OpenAI and Anthropic to train and run cutting-edge models. For a while, it felt like the U.S. was solidly in the lead.
But that perception shifted when China’s DeepSeek released its R1 model at a fraction of the cost it took to train comparable American competitor models. The global AI race is intensifying — and the U.S. is suddenly running in reverse.
New tariffs, as structured, makes America an expensive place to build AI data centers. With levies on AI, networking, and chips, compute costs could rise. This comes just after the price per token has fallen 90% over the past three years. That reversal threatens to choke the momentum that’s fueled the recent AI boom. This means that companies building with AI could feel the squeeze, customers will see higher prices, and innovation could slow across the board.
Gavin Baker echoed the concern, warning that these policies could cost the U.S. its lead:
“Data center semiconductors come into America in finished goods from Taiwan and other Asian countries: servers, storage systems and networking switches. By the time we have developed the capacity to domestically produce these systems, we will have lost the AI race.”
If public markets are any indication, software stocks are getting crushed. Even though software stocks don’t rely heavily on physical supply chains, there are trickle down effects from the uncertainty. As Jamin Ball put it,
“Every CIO is now going to be more cautious. Budgets won’t be as loose. Everyone will “batten down the hatches” to some extent. This means tighter budgets.”
For now, startups should stay focused: build a product customers truly love, grow efficiently without overextending on headcount, and invest in deep, lasting relationships with end users 💪
📚 Read more news:
TechCrunch: ChatGPT isn’t the only chatbot that’s gaining users
Bloomberg: Microsoft Pulls Back on Data Centers From Chicago to Jakarta
📚 Read more (th)reads:
Company: GovWell
Role: Founding Product Manager
Technology: Modern Software for Governments
Funding: $5.5M from Work-Bench, Bienville Capital
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