Seligman Investments is doubling down on the hardware that powers artificial intelligence. The firm has expanded Seligman Ventures, its dedicated venture fund, from $500 million to $1 billion, signaling a strong bet on the physical infrastructure—chips, networking, and power—that underpins the AI boom.
Launched less than a year ago, in February 2026, Seligman Ventures has already put more than $300 million into 14 deals across AI hardware, connectivity, and cybersecurity, according to Reuters. The fund's managing partner, Umesh Padval, said deal flow has been “10 or 15 times” higher than expected, reflecting intense demand for capital in this space.
Why data center bottlenecks matter
The AI boom has created a surge in demand for data centers—the warehouses full of servers that train and run AI models. But building and operating these facilities isn't just about software. It requires a vast physical ecosystem: specialized chips (like GPUs), high-speed networking gear, and reliable power and cooling systems.
As AI models grow larger, these components become critical bottlenecks. If a data center can't get enough chips or enough electricity, it can't deliver the computing power that AI applications need. Seligman Ventures believes the biggest opportunities may lie in solving these bottlenecks, rather than in consumer-facing apps that use AI.
This focus is reflected in the fund's investments, which range from chip challengers to companies working on networking and power solutions. The fund's thesis is that the companies providing the "picks and shovels" of the AI gold rush—the hardware and infrastructure—will see sustained demand, even as competition among AI software providers intensifies.
What this means for investors
For everyday investors, this news highlights a broader trend: the AI investment story is increasingly about infrastructure, not just software. While many people think of AI in terms of chatbots and apps, the real money is often made in the underlying hardware and services that make those applications possible.
This is similar to how the internet boom created huge demand for fiber-optic cables and server farms. Companies that provided that physical backbone often became major winners. Seligman's move suggests that the same could happen with AI.
Investors might also see this as a signal about where venture capital is flowing. When a fund like Seligman doubles its commitment to a sector, it often indicates that other investors are also looking at similar opportunities. This could lead to more funding for startups in the AI hardware space, which could eventually translate into public market opportunities through IPOs or acquisitions.
However, it's important to note that venture capital is a high-risk asset class. Many startups fail, and even successful ones can take years to generate returns. For most individual investors, the more accessible way to gain exposure to this trend is through publicly traded companies that supply the AI ecosystem, such as chipmakers, networking equipment providers, and data center operators.
Recent market activity shows strong investor appetite for AI infrastructure. For example, DayOne's US IPO tests investor appetite for AI data centers, and Anthropic's $11.6 billion cloud deal puts Akamai back in play. These stories underscore the growing importance of the physical layer of AI.
Looking ahead
Seligman Ventures' expansion is a clear vote of confidence in the long-term growth of AI infrastructure. The fund's early success in deploying capital suggests that there is no shortage of promising startups in this space.
Investors should watch for continued deal flow in AI hardware, as well as any signs of consolidation or public listings. The fund's focus on data center bottlenecks—chips, networking, and power—could also shine a light on publicly traded companies that address these same challenges.
As the AI boom continues, the companies that build the physical foundation will likely remain in the spotlight. For investors, understanding this dynamic is key to navigating the evolving AI landscape.
