This was one of the busiest weeks in AI industry history, and three major events paint a clear picture: the war over AI infrastructure is now the main story, and no one wants to be left behind.
Google kicked off its I/O 2026 developer conference with the launch of Gemini 3.5 Flash, the first model in the Gemini 3.5 family. It's a fast, efficient model that delivers strong performance on agentic tasks — complex, multi-step operations — as well as coding, multimodality, and command-line work. According to Google, it runs roughly 4x faster than comparable frontier models and costs less than half the price. It became the default model this week across the Gemini app, Google Search, and the company's developer tools.
The takeaway: Google isn't conceding the "smartest model" narrative to anyone. Instead, it's betting on accessibility, speed, and deep product integration. A more capable Gemini 3.5 Pro was also announced and is expected in June.
SpaceX: the S-1 reveals the full picture
If Google represents the software side, SpaceX is the clearest proof that AI infrastructure has become an industry unto itself. The IPO prospectus filed this week revealed the true dimensions of the company's AI operations — centered around Elon Musk's xAI.
The most striking figure: Anthropic, OpenAI's chief rival, signed a deal to pay $1.25 billion per month through May 2029 for access to xAI's data centers in Memphis. The agreement, terminable with 90 days' notice, gives Anthropic access to a cluster of over 220,000 Nvidia GPUs drawing more than 300 megawatts.
SpaceX also disclosed that xAI spent $12.7 billion on AI infrastructure last year — more than it spent on rockets or Starlink. Future plans include a joint chip venture with Tesla and Intel called Terafab, and orbital data centers slated to begin operations around 2028.
Anduril and the defense AI boom
On the funding side, Anduril announced a $5 billion Series H round at a $61 billion valuation — nearly double its valuation from June 2025. The round was led by Thrive Capital and a16z, bringing the company's total cash reserves to over $11 billion.
Anduril's revenue doubled to $2.2 billion in 2025, and the company holds a $20 billion IDIQ contract with the U.S. Army. Clear signals that the defense AI investment wave is far from over.
What else is happening
Other notable events this week: Apple sent official invites for WWDC on June 8, with hints of a major Siri AI overhaul; Higgsfield AI's HellGrind premiered at Cannes as the first full-length feature film generated entirely by AI; and on Wednesday, Fractile raised $220 million for inference chips.
The big picture is unmistakable: the three largest players — OpenAI, Google, and Anthropic — are in an unprecedented infrastructure arms race, with Musk and SpaceX leveraging their operational edge to become the industry's most sought-after compute provider.
The bottom line
I/O week is always packed with tech news, but this year the real story isn't just Google's new model — it's the numbers SpaceX put on the table. When a company can charge $1.25 billion a month for compute rental alone, AI is no longer just an "application." It's the world's biggest infrastructure business.
