Naveen Rao: AI inference becomes a $10 trillion market and hardware wins
Key points
Key takeaways from The Twenty Minute VC interview with Unconventional AI founder and CEO Naveen Rao (released 24 October 2026):
- Inference at $10 trillion: Rao argues AI inference will become a $10 trillion market, an order of magnitude beyond today's software markets, with the bottleneck shifting from creation to verification as models proliferate.
- Energy is the constraint: He expects energy to be the biggest bottleneck for AI, warning that the US could run out of excess power capacity and that compute efficiency gains alone will not close the gap.
- Hardware must be co-designed: AI chips need to be built together with the models that run on them; Rao does not expect AI chips to commoditise, and sees Nvidia's position as defensible but not untouchable.
- Software investors “f***ed”: He argues pure software investors are “kind of f***ed” as value shifts into hardware and infrastructure, and that SaaS will matter far less in 20 years.
- Open models and robotics: He predicts 80% of AI tokens could flow through open models, and that robotics will be 100x bigger than coding agents; he is investing in robotics today.
