Prominent tech investor Gavin Baker believes that the AI race will witness a profound shakeup next year with the adoption of Nvidia’s Blackwell chips.
In a new interview with Patrick O’Shaughnessy, the Atreides Management chief investment officer says the imminent large-scale deployment of Blackwell chips is a clear threat to Google’s long-held position as the lowest-cost producer in advanced model training.
“What Google has been doing, as the low-cost producer, is that they have been, I would say, sucking the economic oxygen out of the AI ecosystem, which is an extremely rational strategy for them. And for anyone who’s a low-cost producer, you know, let’s just, let’s make life really hard for our competitors.”
Baker notes that Google will no longer be the lowest-cost producer once other players in the AI race begin to deploy Blackwell chips at scale. The investor looks at xAI as the top candidate to be the first adopter of Blackwell.
“One, we’ll see the first models trained on Blackwell in early 2026. So if you’re Jensen or Nvidia, you need to get as many GPUs deployed in one data center as fast as possible in a coherent cluster so you can work out the bugs. And so this is what xAI effectively does for Nvidia. Because they build the data centers the fastest, they can deploy Blackwells at scale the fastest, and they can help work with Nvidia to work out the bugs for everyone else.”
According to Baker, if Blackwell lifts xAI, OpenAI or Meta into the cost-leader position even briefly, Google may no longer be able to deploy AI at deeply negative margins to suppress competitors.
“If you have a decisive cost advantage and you are Google and you have search and all these other businesses, why not run AI at a negative 30% margin? It is by far the rational decision. You take the economic oxygen out of the environment. You eventually make it hard for your competitors, who need funding unlike you, to raise the capital they need. And then on the other side of that, maybe you have an extremely dominant share position.
Well, all that calculus changes once Google is no longer the low-cost producer, which I think will be the case. The Blackwells are now being used for training. And then when that model is trained, you shift Blackwell clusters over to inference. And then all these cost calculations and these dynamics change.”
Baker adds that every major lab understands the stakes and is positioning itself around the coming reset in hardware economics.
“Everyone understands their position on the board, what the prize is, what plays their opponents are running, and it’s really interesting to watch. So I just think if Google changes its behavior, because it’s going to be really painful for them as a higher cost producer to run that negative 30% margin, it might start to impact their stock. That has pretty profound implications for the economics of AI.”
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