Investors who are cooling on AI haven’t stopped writing checks. They’re sending a growing share of that money to batteries. According to The Information, many investors are pulling back from AI but are “pouring cash into startups developing batteries and battery-powered technology.” That’s a sharp turn for a sector that had a hard time raising money just a year or two ago.
The timing matters. Tech stocks have been rough lately, and fears about how AI gets funded have hit Nvidia, AMD and other big AI names. A separate report from The Information says tech giants, chip companies and AI cloud providers have sold or priced more than $300 billion of new stock and convertible securities this year. That’s a lot of supply hitting the market at the same time investors are starting to question AI valuations.
⚡ Quick Summary
- What’s happening: Investors are moving money out of pure AI bets and into battery startups and battery-powered hardware.
- Why now: The AI selloff has made investors more selective, and batteries look like a cheaper way to back the same long-term trends.
- The twist: Much of the new battery demand is tied to AI itself, through data centers, backup power and power-hungry devices.
- Who should care: Founders, infrastructure teams and anyone tracking where tech funding goes next.
🔋 From Dead Zone to Deal Flow
It helps to remember where batteries stood recently. After the electric vehicle boom faded, many next-generation battery developers in the US struggled to raise money. Funding dried up, valuations fell and some startups went looking for a new story.
For several of them, AI turned out to be that story. Some silicon anode companies (the anode is the part of a battery that stores lithium during charging, and silicon can hold more of it than standard graphite) have reportedly landed commercial orders from the AI industry and are already bringing in revenue. That’s a big change from being a bet on future EV demand.
Others have gone further. MIT Technology Review has reported on SES AI moving its AI-driven battery materials discovery platform to the center of its business. Some experts doubt AI materials discovery can rescue the industry anytime soon, but the move shows how closely the two sectors are now tied.
🧠 Why This Matters for AI
What stands out to me is that this isn’t really money running away from AI. It’s money moving down the stack.
The AI buildout needs a lot of physical infrastructure that isn’t GPUs:
- Data center power: Facilities need backup power and energy storage to deal with grid limits and huge load spikes.
- Grid storage: Utilities are under pressure to add capacity quickly, and batteries can go in faster than new power plants.
- Edge and device hardware: AI on phones, robots and wearables needs batteries that last longer and charge faster.
When software and model valuations look stretched, the companies selling the “picks and shovels” start to look safer. You can still profit from AI demand without paying peak prices for the next model lab.
⚠️ Don’t Call It a Boom Yet
Some caution is in order. Kara Rodby of Volta Energy Technologies told MIT Technology Review that investors are pulling back and that weaker public support is making things hard for parts of the battery industry. Hardware also takes a lot of capital, scales slowly and still carries real manufacturing risk.
So this looks less like a new gold rush and more like a reshuffling. Investors are still backing the same long-term trends. They just want something tangible behind the bet.
🔭 What to Watch Next
- More AI-linked hardware rounds: Expect energy storage, power management and cooling startups to pitch themselves as AI infrastructure.
- Strategic investors: Hyperscalers and chipmakers may back battery companies directly to lock in supply.
- Valuation pressure on AI apps: If the rotation keeps going, AI software startups without clear revenue could face tougher fundraising.
If you’re building in AI, your power costs may matter more to your roadmap than which model you pick. Watch this space over the next few quarters. The Information’s original report has more on the deals behind this shift.