AI is already impacting a lot of industries, but it could change the world as we know it.
Venture capitalist and co-founder of the influential firm Andreessen Horowitz, Marc Andreessen, recently articulated a powerful investment thesis that is shaping the flow of capital in Silicon Valley and beyond. In a candid discussion, he asserted that the current advancements in artificial intelligence are not merely an incremental shift but a foundational technological revolution comparable to the invention of the microprocessor. This perspective frames AI as a new kind of computer, one that will necessitate the complete reconstruction of existing software, services, and even entire industries.
Andreessen pinpoints the moment his conviction solidified, moving from cautious optimism to absolute certainty. “I think a year ago, you could have made the argument that this might not really work. Because with LLMs, the hallucinations… it is great that they can write Shakespearean poetry and hip-hop lyrics, but can they actually do math? Can they write code?” he explained. The turning point, for him, was the demonstrable leap in reasoning capabilities. “And now it obviously is, and now they obviously can. For me, the turning point moment, the moment for certainty, was the release of o1 from OpenAI. And then DeepSeek R1, those happened kind of back-to-back. The minute those popped out, you saw what’s happening… and the scaling around that, you’re like, ‘All right, this is going to work because reasoning is going to work.'”
This newfound confidence in AI’s reasoning ability underpins a breathtakingly ambitious outlook. “Every day, I’m seeing product capabilities, I’m seeing new technologies I never thought I would live to see, like really profound,” Andreessen remarked. This led him to a conclusion that dismisses more recent tech analogies. “I actually think the analogy isn’t to the cloud or to the internet. I think the analogy is to the invention of the microprocessor. I think this is a new kind of computer.”
This core belief translates directly into a bold and aggressive investment strategy. “Being a new kind of computer means that essentially everything that computers do can get rebuilt,” he stated. “So we’re investing against the thesis that basically all incumbents are going to get nuked. And everything is going to get rebuilt from scratch, just across the board.”
Acknowledging the inherent risks of such a sweeping prediction, Andreessen remains pragmatic about the nature of venture capital. “Now, we’ll be wrong in a bunch of those cases because some incumbents will adapt,” he conceded. However, the potential for outsized returns justifies the risk. “The power law of the things that are right will be super right. Exactly. And then look, the AI makes things possible that were not possible before.”
The Great Rebuilding or the Great Adaptation?
The “nuking of incumbents” is a stark prediction, but it reflects a historical pattern where market leaders, tied to legacy systems and business models, fail to adapt to disruptive innovations. The critical question for today’s market leaders is whether they can integrate AI deeply into their core operations or if they will be outmaneuvered by a new generation of startups built from the ground up on an AI-native foundation.
We are seeing a dual response. Companies like Microsoft have moved aggressively to integrate OpenAI’s technology across their product suite, from Azure to Office, representing a powerful incumbent adaptation. Conversely, a swarm of new companies is emerging, tackling everything from drug discovery and material science to personalized education and autonomous transportation, with AI at their core. The battle between the “rebuilt” and the “adapted” will define the business landscape for the next decade. As Andreessen’s thesis suggests, while not every new venture will succeed, the ones that do will not just be market leaders; they will be the architects of a new economic reality.