{"id":139764,"date":"2025-03-17T14:19:26","date_gmt":"2025-03-17T14:19:26","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/internet-business\/the-ai-value-chain-by-gennaro-cuofano\/"},"modified":"2025-03-17T14:19:26","modified_gmt":"2025-03-17T14:19:26","slug":"the-ai-value-chain-by-gennaro-cuofano","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=139764","title":{"rendered":"The AI Value Chain – by Gennaro Cuofano"},"content":{"rendered":"


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In the last few weeks, I\u2019ve been tackling a key topic in tech: competition from multiple perspectives. <\/p>\n

There, I\u2019ve started by defining what it means to build AI moats if you\u2019re outside the frontier model stack. <\/p>\n

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At the same time, I\u2019ve covered how what I\u2019ve called\u00a0<\/span>competitive moating<\/a>\u00a0got to be seen from <\/span>how you translate a tech moat into a \u201cmarket power\u201d that lasts.<\/strong><\/em> <\/span><\/p>\n

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Competitive Moating in AI<\/h4>\n<\/div>\n<\/div>\n

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So that you can build<\/span> a business model scaling advantage. <\/a><\/p>\n

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The bad news is that if your company has started before the current AI paradigm, you have quite some work to do to adapt to the new playbook. <\/p>\n

However, for \u201cAI-native companies,\u201d the playbook above is ingrained in how they operate to their core. <\/p>\n

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Before we look at the world of competition in AI, let\u2019s first look at the ecosystem to give you a complete mapping of it.<\/p>\n

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The AI ecosystem is evolving around a layered structure that starts with hardware at the base, powering advanced models and specialized computation. <\/p>\n

On top of that, cloud services provide scalable training and inference capacity, enabling robust AI model development. <\/p>\n

Vertical AI applications deliver targeted solutions for specific industries, while consumer apps bring AI directly to end users in everyday contexts. <\/p>\n

Finally, AI\u2010specific consumer hardware integrates the entire stack into tangible devices. <\/p>\n

This layered approach shapes each company\u2019s competitive advantage based on where in the stack they operate, the value they deliver at that layer, or the intersection of each layer. <\/strong><\/p>\n

That\u2019s how you map out competition in the AI industry! <\/p>\n

That also means that <\/span>for some players, it will make sense to do business only within a narrow section of the layer, while for others, it will make sense to expand across a good chunk of the stack.<\/strong> <\/span><\/p>\n

No player, for now, will ever be able to cover the entire layer, which would make no sense from a competition standpoint, as it would require a gigantic level of vertical integration that might also become a burden rather than a competitive edge. <\/p>\n

However, if you are Google, OpenAI, Microsoft, Amazon, or Meta, <\/span>you want to have your moat built around a few layers of the stack or at the intersection of a few pockets of various layers.<\/strong><\/em> <\/span><\/p>\n

This is part of an Enterprise AI series to tackle many of the day-to-day challenges you might face as a professional, executive, founder, or investor in the current AI landscape.<\/em><\/p>\n

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For the sake of this discussion, I\u2019m leaving out the fabs and foundries part of the stack. <\/p>\n

Why? Well, we\u2019ll get to the point where Fabs and Foundries also become a piece of the stack where massive investments will go to build new ones, but it\u2019ll be a process we\u2019ll see in the next 20 years.<\/strong><\/p>\n

Indeed, I argue that this AI ecosystem is developing with a sort of alignment between public and private, which, at a certain stage, will also lead to massive infrastructure investments that will flow into the energy and fabs stack. <\/p>\n

We\u2019re not there yet and\u2019ll get there in the coming decade. <\/p>\n

But for now, let\u2019s look at the AI hardware layer and what makes it up. <\/p>\n

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This layer is comprised of a few critical building blocks: <\/p>\n

AI Chips<\/strong>:<\/span><\/p>\n