This Week In AI Business: The AI Stack Wars [Week #25-2025]
The artificial intelligence industry stands at a historic inflection point in 2025.
What began as a diverse ecosystem of specialized players competing across different layers of the AI stack is rapidly consolidating into a battle between vertically integrated giants.
This transformation, driven by astronomical infrastructure costs, technical complexity, and competitive pressures, will reshape the technology landscape for decades to come.
Our analysis reveals that the AI industry is undergoing its "Great Convergence," a fundamental restructuring where companies must either expand across the entire AI value chain or face extinction.
The most dramatic example is OpenAI's Project Stargate, a $500 billion infrastructure initiative that signals the company's transformation from a model provider to a full-stack AI giant.
This move, unthinkable just two years ago, exemplifies how the economics of AI are forcing radical strategic shifts across the industry.
By 2030, we project the AI landscape will be dominated by 3-4 vertically integrated empires, with specialized players either absorbed or relegated to niche positions.
This consolidation pattern mirrors historic transformations in the technology industry, but at an unprecedented speed and scale.
The implications extend far beyond corporate strategy to questions of innovation, competition, and the fundamental structure of the digital economy.
We’ll cover it all!
The weekly newsletter is in the spirit of what it means to be a Business Engineer:
We always want to ask three core questions:
What’s the shape of the underlying technology that connects the value prop to its product?
What’s the shape of the underlying business that connects the value prop to its distribution?
How does the business survive in the short term while adhering to its long-term vision through transitional business modeling and market dynamics?
These non-linear analyses aim to isolate the short-term buzz and noise, identify the signal, and ensure that the short-term and the long-term can be reconciled.
