TL;DR

Former Meta CTO Mike Schroepfer’s Gigascale Capital raised a $250 million fund focused on energy, grid infrastructure, and critical minerals startups. The fund bets that AI’s energy demands will make clean power startups the real winners of the AI boom.

Gigascale Capital, the venture firm led by former Meta chief technology officer Mike Schroepfer, has raised a $250 million fund to invest in energy, grid infrastructure, and critical minerals startups. The fund, announced on Monday, is Gigascale’s second and its first to include institutional investors. It arrives as most of the venture capital industry has pivoted away from climate tech and toward AI, making Schroepfer’s continued bet on the physical economy a deliberate contrarian move.

“The companies we back win because they’re cheaper, faster, and more reliable,” Schroepfer said. “Climate impact is the result of better-performing systems.” The framing is notable: Gigascale is positioning clean technology not as a values-driven investment thesis but as an economic inevitability driven by performance advantages.

AI is the catalyst, not the competitor

The irony of a former tech executive raising a climate fund during an AI boom is less contradictory than it appears. US utilities plan to spend $1.4 trillion by 2030 to meet the electricity demands of AI data centres, which could consume 9% of the country’s total electricity by the end of the decade, up from 4% in 2023. Natural gas turbines, the default backup power source, have waitlists stretching into the early 2030s.

That power crunch creates the opening Gigascale is targeting. Companies that need massive amounts of electricity, whether for AI training, manufacturing, or industrial processes, cannot wait for utility-scale infrastructure to catch up. Startups building solutions to the data centre energy problem are already attracting significant capital, and Schroepfer has argued on podcasts that “bring-your-own power is going to be a competitive advantage over time” for energy-intensive businesses.

Gigascale’s existing portfolio reflects this thesis. Commonwealth Fusion Systems, which raised $863 million from investors including Nvidia, Google, and Bill Gates, is developing commercial fusion reactors. Form Energy builds 100-hour iron-air batteries designed for grid-scale storage. Heron Power raised $140 million for grid infrastructure technology. These are not consumer apps. They are companies building the physical infrastructure that the digital economy requires.

Bucking the climate tech backlash

The $250 million raise is significant because it comes at a moment when much of the venture industry has abandoned the “climate tech” label. After a wave of high-profile climate-focused funds launched between 2020 and 2023, returns have been mixed and several prominent climate startups have struggled. European venture firms are raising large funds with broader mandates, and US investors have largely redirected capital toward AI-native companies.

Schroepfer started Gigascale after studying climate technology during the pandemic. His argument is that the sector’s problems are not technological but commercial: clean technologies need to be cheaper and faster than incumbents, not just greener. Solar energy is his reference case, a technology that won market share not because of environmental mandates but because it became the cheapest source of electricity in most of the world.

The fund will also look at critical minerals and what Schroepfer calls “physical AI,” a term that likely refers to robotics and automation applied to manufacturing, mining, and construction. Battery storage and mineral supply chains are increasingly recognised as bottlenecks in the energy transition, and startups that can address those constraints have a clearer path to revenue than companies building yet another solar panel.

The Meta connection

Schroepfer served as Meta’s CTO for more than a decade before stepping down in 2022. His tenure included oversight of the company’s infrastructure buildout, including the data centres that now consume massive amounts of electricity to run AI workloads. The experience gave him direct exposure to the energy constraints that large-scale computing faces, an understanding that informs Gigascale’s investment thesis.

Meta itself has become one of the largest corporate buyers of clean energy, with 2026 capital expenditure guidance between $125 billion and $145 billion, much of it directed toward AI infrastructure. The search for solutions to AI’s energy problem has produced ideas ranging from data centres in space to small modular nuclear reactors, but the most commercially viable answers are likely to come from startups building practical improvements to energy generation, storage, and distribution.

Gigascale’s $250 million is modest relative to the scale of the energy infrastructure challenge, but the fund’s contrarian positioning could prove well-timed. If the AI industry’s power consumption continues to accelerate and legacy energy infrastructure cannot keep up, the startups building the physical layer will capture value that no amount of software optimisation can replace.

TL;DR

IBM stock surged 10% after Barclays initiated coverage with an overweight rating and $350 target, arguing that IBM’s infrastructure software is the “good part” of enterprise software immune to AI disruption. The gains extend a 30% May rally driven by a $10 billion quantum computing commitment and Trump administration funding.

IBM stock surged 10% on Monday after Barclays initiated coverage with an overweight rating and a $350 price target, roughly 11% above the opening price. The jump extends a run that has seen IBM gain nearly 30% in May alone, its best monthly performance in almost 24 years. The stock is now up 10% year to date, erasing losses from the SaaSpocalypse selloff that hit software stocks earlier in the year.

Barclays’ bull case is not primarily about quantum computing, though that features prominently. The core thesis centres on IBM’s infrastructure software portfolio, which serves large, heavily regulated enterprises and generates the majority of the company’s profit. In a market where vibe coding and AI agents are threatening horizontal SaaS companies, Barclays argues that IBM’s type of software, deeply embedded infrastructure tools, is precisely the category least vulnerable to disruption.

The software thesis

“While software has a negative investor connotation at the moment, IBM is offering infrastructure software (the good part) to large, often heavily regulated customers, which creates a very sticky set-up that should not see negative AI implications,” the analysts wrote. They expect mid-single-digit organic revenue growth and ongoing margin expansion, describing IBM as “a stable earnings compounder with a Quantum option.”

The distinction matters. The SaaSpocalypse punished software stocks indiscriminately, but the companies most exposed are those selling horizontal tools, project management, CRM, form builders, that AI can replicate. IBM’s software business, which includes middleware, database management, and enterprise integration platforms, sits at the infrastructure layer where switching costs are measured in years and compliance requirements create natural moats.

In their most optimistic bull case, Barclays set a price target of $449, representing 51% upside from the last close.

Quantum as “option value”

Barclays framed IBM’s quantum computing ambitions as additional upside rather than the primary investment thesis. “Quantum computing has the potential to become the next major compute paradigm, following the CPU and GPU eras,” the analysts wrote, comparing IBM’s positioning in quantum to Nvidia’s dominance in GPUs. Quantinuum’s massively oversubscribed IPO last week demonstrated that investor appetite for quantum exposure is running hot.

IBM has committed $10 billion to quantum computing over the next five years, according to a regulatory filing disclosed last week. The centrepiece is Anderon, a standalone quantum chip foundry headquartered in Albany, New York, built with $1 billion from the US Department of Commerce under the CHIPS Act and a matching $1 billion from IBM. Anderon will operate the first purpose-built 300-millimetre quantum wafer fabrication facility in the United States.

The Commerce Department’s $2 billion quantum portfolio, split across nine companies and announced on 21 May, is the largest single quantum R&D commitment in US history. IBM received the largest share. Smaller firms including D-Wave Quantum, Rigetti Computing, and their European counterparts are pursuing different quantum architectures with their own government backing.

The Trump clip

Adding a distinctly 2026 element to the rally is a video of President Trump from a December 2025 White House business roundtable, which has been recirculating on X and Reddit. Trump called IBM CEO Arvind Krishna “a legend” and said, “He’s taken the stock from a rather low price to a very nice price. I won’t say high because I’m sure you’re going to say it’s going to go up a lot more, right?”

Social media posts framed the clip as Trump endorsing IBM stock. Trump’s personal investment account has purchased IBM shares in recent months, according to Office of Government Ethics filings. The combination of a presidential mention, visible government support through the quantum funding programme, and a Barclays initiation has created a momentum loop that draws both institutional and retail interest simultaneously.

The bigger picture

IBM’s recent gains fit into a broader pattern of legacy computing companies finding new relevance in the AI era. Dell’s stock surged 32% last week on AI server demand. Cisco, once a dot-com era cautionary tale, has rallied on enterprise networking demand driven by AI infrastructure buildouts. IBM’s version of the story combines two threads: a software business that is defensible against AI disruption, and a quantum computing programme that could become transformative if the technology matures on schedule.

Whether the quantum option alone justifies the current run is debatable. IBM’s quantum programme is real and well-funded, but commercial quantum computing remains years away from generating meaningful revenue. Barclays is explicit that the investment case rests on the software business today and quantum as future upside. For investors burned by the SaaSpocalypse, the appeal of a software company whose customers cannot easily leave, and whose product category AI makes more valuable rather than obsolete, is straightforward.