AI Supercycle in Motion

Each year, Coatue’s East Meets West (EMW) presentation brings plenty of food for thought. Here is a summary of the 2025 “Coatue View on the State of the Markets” keynote:

1. Tech is driven by major waves of innovation — internet, mobile, cloud, and now AI — which have historically driven outperformance in the long run. A single dollar invested in the Nasdaq-100 in 1985 would be worth $228 today, compared to just $90 in the Dow Jones (nominal terms). Coatue speculates that AI could ultimately account for 75% of total U.S. market cap — but with an important caveat: the Nasdaq fell 78% during the dot-com crash and 56% in the global financial crisis.

2: GenAI adoption is unfolding at an unprecedented pace.Just 30 months after launch, ChatGPT has reached 800M monthly active users — a milestone that took Facebook six years. Already, 42% of U.S. businesses pay for AI subscriptions. Anthropic hit $1B in annualized revenue within 21 months, then jumped to $2B just three months later, and $3B two months after that. Coatue reminds us: the “Golden Age” of SaaS took 6 to 8 years to truly ignite — and we’re only in year three of AI. Early cloud pioneers, too, were met with analyst skepticism: “The increased level of capex will start to impact gross margins over the next several years… the higher capex will impact the company’s ability to return cash to shareholders” — Barclays.

3. AI infrastructure capex is soaring. tech giants are going all-in, with projected 2025 capex from Microsoft, Google, Amazon, Meta, and Tesla totaling $365B, 70% more than 2024.

4. Coatue suggests that AI could set off a virtuous macro flywheel: productivity gains → lower unit labor costs → lower inflation → lower interest rates → stronger GDP growth → rising tax revenues → a falling debt-to-GDP ratio. Personally, I’m skeptical. The state remains insatiable, and UBI-like handouts are bound to fall like manna. What I do believe is this: the U.S. remains remarkably resilient — home to the tech giants, the world’s innovation engine, and the top destination for global talent. Frankly, there’s no real competition.

5. Nothing especially new on the U.S. VC front that I haven’t covered before. AI has reignited venture activity, with capital concentrating in a few breakout names — spawning a class of mega private companies like OpenAI, Anthropic, SpaceX, Stripe, Anduril, and Databricks. 2025 kicked off with solid IPOs (CoreWeave, Circle), and the return of M&A (Wiz, Scale). The unicorn economy now makes up 11% of the Nasdaq’s value — close to its 12% share at VC’s 2021 peak. Public markets are once again rewarding growth over profitability — a rational response in a world where public growth is increasingly scarce. Finally, the nature of LPs has changed from Endowments and Pension Funds to FOs, HNWIs, Sovereign Wealth and Secondary Funds.

Conclusion

AI’s rise isn’t a fad; it’s catalyzing a supercycle.

Massive infrastructure investment, breakneck adoption, and the emergence of category-defining leaders are laying the groundwork for a long-term shift in global markets and value creation.