I thought we were broke

Welcome to Cautious Optimism, a newsletter on tech, business, and power.

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Groq rising

Yes, supposed leaks are flying the Grok 4 is going to be hot stuff when it drops, but we need to talk about Groq.

Groq is an inference computing company. It builds LPUs, or language processing units, processors that it claims are purpose-built to handle AI inference. Inference is the work that AI models undertake when a user prompts them. If you have asked ChatGPT a question, you have run an inference workload.

As a company Groq is betting that building chips and racks for inference work and not training compute, it can offer more efficient options to developers looking to save money. Groq also claims that its chips are quick.

So quick and efficient, in fact, that Meta selected Groq as one of its inference partners for its Llama 4 API, along with Cerebras Systems. That win earlier in 2025 was compounded by Groq snagging a piece of the HUMAIN contract, Saudi Arabia’s G42 competitor in the Middle East. Groq raised a chunk of capital in the process to boot.

That brings us up to the latest, news from Groq that it is expanding into Europe. Expanding on an existing partnership with Equinix, a data center company with a global footprint, Groq will establish “its first European data center footprint in Helsinki, Finland to meet the growing demands of European customers,” offering “lower latency, faster response times at scale, and strong data governance” than it could have offered from, say, United States-domiciled chips.

There’s real reason to make the move. Not only is there regulatory matters to consider, but some data center shops with European operations an AI focus are seeing rapid growth. Nebius, DataCrunch and Evroc are names that come to mind.

Given the direction the global Internet is evolving — different spheres of influence with varied, changing rules — if you want to serve any particular AI market, you’d best have machines in situ, or risk missing out on business. Enter Groq, which is taking its talents to Europe after dropping anchor in Saudi Arabia.

Why go through all of the above, when we’re really turning around a single inference provider — one among many — making a single move? Because Groq is a viable competitor to a chunk of Nvidia’s business, and because the fine folks at the smaller company gave us a tasty datapoint. From Groq’s own release discussing its move into Europe:

This expansion to Europe builds on additional capacity in the U.S. (Equinix, DataBank), Canada (Bell Canada) and the Kingdom of Saudi Arabia (HUMAIN), which are now serving more than 20 million tokens per second across Groq’s global network.

The question we have to ask next is simple: How many tokens is 20 million per second? Recall that we snagged the following datapoints from Alphabet and Microsoft when they dropped their calendar Q1 2025 earnings:

• Microsoft processed 50 trillion tokens in March 2025

• Google processes 480 trillion tokens per month, as of I/O

What’s fascinating is that Groq claims to process around 50 trillion tokens per month at its stated rate. The real number is a touch higher, but it’s close enough to what Microsoft claims as to be spitting-distance. We are comparing apples and oranges to some degree; how Microsoft and Alphabet count matters, and I doubt that their methodology is precisely the same. Therefore, Microsoft’s number is probably not as minute to Google’s, if we’re comparing user-requested AI inference tokens outside of a search context. (That’s what we call speculation in the business.)

Regardless, Groq’s 20 million per second claim means that it’s crunching a material portion of total, global AI inference requests. So long as we remind ourselves that we’re speaking directionally instead of precisely, Groq is a company to watch.

All hail the America party

Elon Musk’s nascent America Party is afoot, after the business magnate threatened to create it in the buildup to the eventual passage of the recent budget reconciliation bill. The controversial legislation included a number of headscratchers, including large tax cuts at a time of spiraling debt, $5 trillion worth of new borrowing capacity from elected officials ostensibly worried about the national debt, new tax breaks for coal production, and a reduction in government support for new energy technologies.

For now, the America Party is whatever Musk last tweeted. But it’s worth making note of two tweets that Musk gave his nod to that might help explain his plans.

• Musk retweeted Scott Adams’ post arguing that the America Party might not take shots at the Oval Office, and instead run candidates that “give Republicans a new way to get past politics to solutions the country wants and needs, such as deficit reduction.”

  • Gist: Musk won’t necessarily put up a candidate to take on JD Vance in the next election.

• Musk retweeted BasedBeffJezos post that the “America party could soak up a lot of the existing Dem base that feel politically homeless / hate extremism.”

  • Gist: Apart from the final clause of that sentence being humorous, the argument here is that there are a great number of Democrats looking for a new political home

Supporting the Democratic Party is akin to being a Jets fan, or perhaps a true believer in future Mets dominance. But even if the American liberal party is organizationally a mess, I doubt the framing that we see in the second tweet.

It is true that a good number of wealthy folks in technology circles are liberal in social terms — supporting gay marriage, abortion access, and the like — but utterly horrified that antitrust regulators might have teeth, or that their towering wealth and influence will attract criticism. But those few folks are not the democratic voting base by definition of being too small a polity to constitute a major bloc at all.

What those people do have is wealth and influence, so the idea of crafting a political home for just those individuals could, in fact, have some electoral sway. But the idea of a mass defection of Democrats towards Musk’s new party seems specious; after all, with whom is Musk more popular? Democrats or Republicans?

I thought we were broke

Closing today, I’m preparing a section for TWiST about changes to the QSBS exemption that the budget bill brought to law. Even if you find tax policy boring, stick with me. We’ll proceed in bullet points to make this painless:

• The Qualified Small Business Stock (QSBS) exemption allowed investors in companies with less than $50 million in assets to sell up to $10 million worth of their shares in the business with no capital gains tax, so long as they held for five years. There’s nuance to the rules, but that’s the gist.

• Now, the cap has been raised to $15 million worth of tax-free sales, companies can now have $75 million worth of assets, and instead of a hard, five-year minimum, QSBS benefits can be unlocked in tiers starting after the third year of holding. Even more, the $15 million figure will rise with inflation.

The new measures will cost just over $17 billion in the next decade, for a total QSBS cost of $44.6 billion. Total cost in the next ten years? $61.8 billion, or $17 million per day.

I bring all this up to underscore that while it’s not unreasonable to subsidize startup investing — encouraging greater capital investment into upstart businesses is a good way to bolster competitive dynamism — it is hard to stomach the act when the same voices decrying our nation’s status as broke are the chief beneficiaries of an expanded government handout tailored to their current tax assessment.