Ben Horowitz compares AI neocloud risks with LoudCloud’s bandwidth bet

LoudCloud’s bandwidth lesson

According to Horowitz, bandwidth cost $1,500 per megabit in 1999 and was difficult to obtain, pushing LoudCloud toward three-year contracts. By 2001, he said, the price had fallen to $50 per megabit.

A company that borrowed money to secure the expensive capacity could be trapped as the market moved against it. Horowitz’s broader point was that such price swings can be outside an entrepreneur’s control, even when a long-term supply deal initially looks necessary.

Why he sees a different setup for CoreWeave

Horowitz argued that today’s AI market currently has the opposite supply problem. Token prices have fallen, he said, but GPU prices have not because computing capacity remains scarce.

He also pointed to rising data-center costs. In his account, construction labor is difficult to find, political constraints make new projects harder to build and demand has not subsided. He called those conditions “very big tailwinds” for CoreWeave.

That view came with a qualification. Horowitz said debt markets are difficult independently of CoreWeave, leaving financing pressure as a risk even while scarce capacity and higher infrastructure costs support the company’s current position.