a16z's second State of Markets report (1H'26) argues tech is now "the everything cycle," contributing ~76% of S&P 500 earnings growth in 2026 as of late August. The author highlights a rotation from software to hardware, driven by the AI buildout converting hyperscaler cashflow into semiconductors, plus infrastructure, defense and reshoring spending. GPU obsolescence fears are overstated: A100s price at-or-above start-of-year levels as compute demand outpaces supply, while AI adoption remains shallow—only ~2% of S&P 500 firms track AI metrics and ~2% of US households pay for AI. Software saw a re-rating, not apocalypse: ~75% profitable but ~30% growing 20%+.

AI summary of the linked source — not editorial content.

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