Cheap Compute App Boom
kevin joo@entropybender
−8.9%
since Oct 6
The idea
I think the GPU and training-capex trade is topping out, with contracts getting cancelled and inference still priced too high, but that doesn't stop people from running models, it just shifts the money to whoever sells compute cheaply and to the plumbing every new app needs. So this leans into serverless and edge platforms, developer tools, databases, and app delivery infrastructure, while deliberately skipping GPU makers and hyperscaler capex names. It's concentrated on purpose since I see this repricing over the next couple of years, not a decade, with some cash held back to add on dips.
What it owns
- These companies sell compute in small, affordable slices to developers building new applications. · CloudflareIt sells cheap compute slices through Workers and Durable Objects, growing as a general app platform beyond its security roots., DigitalOceanIt offers simple virtual machines and managed services priced for builders seeking cheaper alternatives to large cloud providers., FastlyIt is an edge platform offering cheaper compute and delivery services, competing in the market for application infrastructure., NutanixIt turns hardware into shared, sliceable virtual machines, the model that wins as inference costs push toward cheaper shared compute.36%
- As more applications ship faster, demand for monitoring, code management, and deployment tooling grows alongside them. · DatadogIt bills per service and host, so growth in new applications flows directly into its monitoring revenue., DynatraceIt provides enterprise-grade monitoring for larger companies shipping applications, billed when complex deployments go live., GitLabIt sells the pipeline from code to deployment, charging teams for every software release they push., AtlassianIt provides workflow and project management tools that teams pay for automatically as headcount and projects grow., JFrogIt stores and ships the software artifacts every application build produces, growing as teams deploy more applications.26%
- Every new application needs infrastructure to store and retrieve data, regardless of which platform it runs on. · SnowflakeIt is where application data ends up for analysis, with usage-based pricing that grows as the number of applications increases., MongoDBIt is the default database choice for developers shipping applications quickly, benefiting as more apps are built., ElasticIt sells search and vector storage that AI applications call to find and retrieve information from data.17%
- These are the APIs, networking, and traffic management layers that connect applications to their users in production. · TwilioIt is the messaging and communication API that new applications call to reach users, billed per use., EquinixIt rents data center space and network interconnection, benefiting as demand for connectivity and colocation grows with application traffic., F5It manages and secures traffic hitting applications, paid as the volume of APIs and application endpoints increases.11%
- Cash10%