The Stack

Six physical layers plus two bands that cut through all of them.

Band Rules and society

Everything that decides what the rest of the stack is allowed to do. Regulation, litigation, trade rules and public opinion. It is the layer most likely to surprise you, because it moves in steps rather than curves.

Cuts through every layer. A court ruling on training data reprices the model layer overnight. A local moratorium stops a power project two years before anyone notices.

L6 Applications and agents

Where AI meets an actual job. This is the only layer whose success is measured by someone outside the industry choosing to keep using it.

Sits on tooling and models. When the model layer shipped longer autonomy in July, this layer got agents that finish work instead of suggesting it. Adoption did not follow.

L5 Tooling and infrastructure

The layer nobody outside the industry can name and nobody inside it can avoid. Routing, caching, cost control, memory and the protocols agents use to talk to tools.

Sits on models, carries applications. It repriced hard this year because on long agent runs the bottleneck stopped being model access and became everything around it.

L4 Models

The labs, their releases and their prices. Prices are quoted per million tokens, where a token is roughly three quarters of a word.

Sits on cloud capacity, feeds everything above. Three frontier models from two labs now cost exactly the same to run. When rivals land on one number without agreeing to, something one layer down is squeezing all of them. Here that is memory, and the power to run it.

L3 Iron and cloud

The physical machines and the businesses that rent them out, from Amazon and Microsoft down to specialist GPU landlords.

Sits on silicon and power, carries models. Capex here stopped being a demand signal this year and became a cost signal, because the same gigawatt now costs more to fill.

L2 Silicon

Fabs, lithography, memory, advanced packaging and the processors themselves. The layer with the longest lead times and the fewest suppliers.

Sits on power, carries cloud. For two years the scarce thing here was packaging. This year it became memory, and that single change reset the cost of every layer above.

L1 Power and land

Generation, grid capacity, interconnection queues, water and permits. The slowest layer to change and, since August, the one that decides how fast everything else can grow.

Carries the entire stack. When Texas froze its queue on 3 August, it set a ceiling on how many chips can be installed in 2027 that no amount of fab capacity can lift.

Band Money

Funding, debt, public markets and the compute contracts that tie the layers together. This band is where a capacity decision at L1 becomes somebody's refinancing risk in 2028.

Cuts through every layer. This year it moved from equity to debt, which changes who carries the risk if demand does not show up.

Strata, the whole AI stack, explained simply. Every number carries a source and a confidence label.

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