# Compute demand is keeping future GPU capacity expensive

Markdown copy of https://realalpha.app/s/compute-demand-is-keeping-future-gpu-capacity-expensive/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Gavin Baker](https://realalpha.app/people/gavin-baker/) · Managing partner & CIO, Atreides Management · Runs the Atreides Management investment firm, a technology investor and former Fidelity OTC Fund portfolio manager.
- Host: [John Coogan](https://realalpha.app/people/john-coogan/) · Co-host, TBPN · Co-founded Soylent and Lucy; OpenAI bought his show TBPN in April 2026.
- Host: [Jordi Hays](https://realalpha.app/people/jordi-hays/) · Co-host, TBPN · Founded Branded Native; co-founded fintech Capital, which Rho bought.
- Show: TBPN
- Episode: [Technology Is Back, Gavin Baker Live, Math Solved Again, Anduril Laptop, DoorDash + Instacart](https://realalpha.app/v/OV1QfQ3C29Q/), Oct 27, 2026
- Moment: 1:33:23 to 1:40:53 of the episode (8 min), playing on https://realalpha.app/s/compute-demand-is-keeping-future-gpu-capacity-expensive/; the episode from there: https://realalpha.app/v/OV1QfQ3C29Q/?t=5603

## Quote

> “The forward, it's not just that the spot market is tight. If you want to cluster a year from now, you have to **pay a lot of money**.”
> — [Gavin Baker](https://realalpha.app/people/gavin-baker/) at [1:34:48](https://realalpha.app/v/OV1QfQ3C29Q/?t=5688) · TBPN

## Takeaways

1. Compute prices are rising in both spot and forward markets.
2. Some companies struggle to secure clusters for 2027.
3. Experienced operators have an advantage in bringing GPUs online.

## About this segment

Gavin Baker says GPU rental prices and forward contracts point to tight compute supply well into 2027. He explains why operators’ ability to energize and run clusters matters as much as buying GPUs.

From “Technology Is Back, Gavin Baker Live, Math Solved Again, Anduril Laptop, DoorDash + Instacart”, Oct 27, 2026. [Watch the full episode](https://realalpha.app/v/OV1QfQ3C29Q/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[1:33:31](https://realalpha.app/v/OV1QfQ3C29Q/?t=5611) how are you processing like how the how the how the industry can sort of absorb all of that supply if we hit the higher end of some of the ranges being discussed and and and is it just jevin's paradox you know again and again and again uh and again until we finally every everyone says like you know everyone likes to say it but it's hard to fully internalize yeah i think that's i think that's right it's it's easy to say it's it's hard to internalize and believe and october it's kind of been a strange month because the price to rent essentially any kind of a gpu has gone up every day so the spot market for compute is getting tighter and it's not just the spark market um you know it is i do love reading these primers on x from you know commodity and macro investors about these super complicated concepts called backwardation and contango and what they might

[1:34:30](https://realalpha.app/v/OV1QfQ3C29Q/?t=5670) mean for the forward curve of compute and the future price of compute you know these are Contango, backwardation, but, you know, Silicon Data, which I do think is, you know, my firm is an investor in them, but I do think they're the most authoritative data source. Carmen Lee, the founder, stood up at GTC and said that the compute market is now in Contango. The forward, it's not just that the spot market is tight.

[1:35:00](https://realalpha.app/v/OV1QfQ3C29Q/?t=5700) If you want to cluster a year from now, you have to pay a lot of money. And this is maybe another discontinuity between public and private markets, but just the number of companies we have in our portfolio who are like, OK, we got a cluster of 4,000 Blackwells and we got it in May or June of 26 and we want to bring on another cluster of 4,000 in September of 2027. And they are shocked by how much more they have to pay in the future.

[1:35:36](https://realalpha.app/v/OV1QfQ3C29Q/?t=5736) And it's not like everybody is aware of the supply that's coming on. But even with all of that supply coming on, it is hard for the companies in our portfolio to find compute even well into 27. So for all the commodity experts who are focused on backwardation and what that is. Implied, I got news for you. We're not in backwardation anymore. And then I do think as far as how much capacity is going to come online, one thing that I think is actually healthy about what's happened in these financing markets is I hope it concentrates capacity and supply in the competent operators where they can finance it through prepayments.

[1:36:26](https://realalpha.app/v/OV1QfQ3C29Q/?t=5786) You can kind of finance these GPU purchases two ways. And by the way, CoreWeave is great. CoreWeave runs GPUs well. They bring them on. They are very, very good. They just sadly locked in a vast amount of compute and long-term contracts that are now way, way under market. Interesting. So they sold their GPUs for fixed prices, and that's why they're getting hammered right now. It's not that they don't have compute.

[1:36:54](https://realalpha.app/v/OV1QfQ3C29Q/?t=5814) They're not bringing it on. They have the semi-analysis, diamond tier. Everyone knows that the clusters work. They're good. They are reliable. But they just sold for too cheap, and they should have held on or had variable pricing. Do you think Elon studied that and said, like, we're not going to make that same mistake, and that's why they're adopting this more short-term contract? Elon is a first principles thinker.

[1:37:18](https://realalpha.app/v/OV1QfQ3C29Q/?t=5838) I don't think he was probably studying Corweave or Nebius or anyone else. He was probably reasoning from first principles, but the conclusion he came to is prices are going up. If we are willing to sell into the spot market, we can have paybacks well under a year, get big prepayments. And that's – I think that's a better probably financing model for the market we're in. And what I also like about it – and by the way, CoreWeave I think is very aware of this.

[1:37:49](https://realalpha.app/v/OV1QfQ3C29Q/?t=5869) They're trying to get more spot exposure. They're trying to, you know, do less of these big long term offtake agreements. But standing up a big GPU club, not just standing up, bringing on the power, standing up the cluster, it's like running a Formula One team. And a bunch of people who have no real relevant experience, you know, whatever, they acquire some land and some power. And then, you know, they get a zero down payment offtake agreement from someone.

[1:38:22](https://realalpha.app/v/OV1QfQ3C29Q/?t=5902) And a lot of that is being cleaned up. And I think, you know, supply is being what this is a forcing function to allocate GPUs to people who can actually bring on a cluster, energize the GPUs, run it well. Like, you know, running a Formula One team, it's like really hard. You got to like pack everything up, put it on a plane, go to a new city, unpack it, set it up, set the car up. You need all the people, you know, to like, you know, whatever, change the tires, to change the rear wing if you get in a collision, to, you know, do whatever needs to be done during the race, to do the strategy, to communicate with the driver.

[1:39:06](https://realalpha.app/v/OV1QfQ3C29Q/?t=5946) it's really really hard if and it's not like you know some of these people they don't have the relevant experience you know corwee crusoe nebius spacex the big hyperscalers you know these are companies that can bring on gpus and energize them and run them um but and i do think something that was announced at gtc berlin is actually pretty important for this and that's that dsx pod which is going to make it a lot easier you know it's seven racks it comes pre-assembled you know you just kind of literally plug it in and it works and right now when you get the gpus you know maybe if you're if you're spacex and you're really really exceptional at execution in the physical world you can get them energized quickly but a lot of people it takes them six months you know three months six months to get them energized really get them working

[1:40:00](https://realalpha.app/v/OV1QfQ3C29Q/?t=6000) Thank you. And if we can, through, you know, this new product from Jensen, get that time down, I think that's also healthy because that effectively takes a lot of working capital out of the market. You know, you have – as these numbers are getting bigger, if it takes six months to energize them, you know, that could be hundreds of billions of dollars of assets that are not generating revenue. So I think that's another – that's a product innovation that's going to help with this.

[1:40:26](https://realalpha.app/v/OV1QfQ3C29Q/?t=6026) But I think this is, you know, we will see who energizes GPUs in 27. I'm confident that the, you know, the companies I named, I think they're going to, I mean, the future is always uncertain. But these are companies with a proven track record of execution. And we'll see about others.