Good morning. Computing has been nearly synonymous with silicon-based semiconductors longer than most people can remember. It has led to mind-bending progress, but that performance has come at a cost in capital, land and energy. What if there’s a better way to meet soaring demand for high-end computing by supplementing semiconductors with something new?

One idea is to relegate certain demanding workloads to superconductors, which conduct electricity with zero resistance and produce almost no heat, Snowcap Compute co-founder and CEO Mike Lafferty told me. That reduces energy consumption by orders of magnitude, eliminating the need for extensive cooling and spacing of components in data centers, he said.

I met with Lafferty in Palo Alto, Calif. at the offices of its investor Playground Global, where Snowcap is based. I was fascinated by their superconducting research. It is a wildly ambitious idea. But it is a serious one. And that is the sort of thinking that might be necessary to transform the highly challenged economics of computing for the better. You can read about it here, and please let me know what you think.

Over the course of a fruitful career, Lafferty has developed hard-won insights into constructing and leading teams. You can read more about that below in today’s Leadership Outlook.

When Mike Lafferty formed Snowcap Compute, he made a point of hiring people with decades of experience. The average age of team members is in the 50s, which is unusual in Silicon Valley where youthful founders are the order of the day, or at least command the most attention.

“A lot of startup culture starts off with software-heavy types of design, where they get very quick feedback on what they’re doing. In the hardware design space, it can be seven to nine months at a time to get feedback on your designs and as a startup that’s death, if one of those don’t work,” Lafferty told me. “The critical thing for what we’re building, and staying on budget [and] on schedule…is a team that has actually seen and felt enough pain in their life to know what’s safe and what’s not.”

Those insights appeared exclusively in The Morning Download last month, and that piece was published as an article this morning. You can read it here.

Here’s one additional thought that isn’t in that column. Lafferty got his start in the 1990s at Lucent Technologies, the telecommunications equipment company that was spun off of AT&T and included Bell Labs.

By today’s standards, Bell Labs and Lucent contradicted many prevailing assumptions about where innovation comes from. It was part of a massive corporate entity that operated as a utility under extensive government regulation. And yet it produced breakthroughs including the transistor and the framework for the cell phone.

That system shaped generations of scientists and engineers such as Lafferty, who continue to this day to advance meaningful research. That isn’t an argument to restore an old system of regulation. But it’s a reminder that even the largest and most bureaucratic of companies is capable of incredible innovation, if its leadership makes a place for it.

Accounting questions swirl around data-center power deals. As tech giants pour hundreds of billions into AI data centers, investors are growing frustrated with murky financial disclosures around the massive power deals fueling that buildout, the Journal's Mark Maurer reports.

Companies are required to flag significant business risks and material commitments, but no specific rules govern disclosure of the "city-sized" power purchase agreements increasingly tied to such deals.

In their latest financial reports, some tech giants cited power costs as part of infrastructure spending. Alphabet recently disclosed a $9.9 billion, 20-year power deal. Other tech giants mentioned power more briefly. In Amazon’s annual report, the company said its unconditional purchase obligations—or non-cancelable funding commitments—are expected to total $84.8 billion.

An alarm from VC land. Venture firm Lux Capital is sounding the alarm on startup risks, urging its founders to extend cash runways, review debt covenants, and brace for tariff-driven cost increases, the Information reports. "Signals suggest something is off,” Lux said in a letter Tuesday that was reviewed by the Information. Co-founder Josh Wolfe in a separate conversation with the Information's Katie Roof said he was concerned with “the bubble of AI," and that many in the VC industry  “privately harbor these very vocal doubts.” 

Claude propels Anthropic to $20 billion. The AI startup is on track to hit nearly $20 billion in annualized revenue, up from $9 billion at the end of 2025, the result of surging adoption of its AI models and products, including its fast-growing Claude Code, Bloomberg reports.

The $20 billion projection is based on current performance and now that trajectory is under threat. On Friday, Defense Secretary Pete Hegseth declared the AI developer a supply-chain risk. How that designation will affect Anthropic's core business of selling AI software to enterprise customers remains to be seen.

Altman defends Pentagon deal. OpenAI CEO Sam Altman at an all-hands meeting Tuesday defended his decision to allow the Pentagon to use the startup’s tools for classified work. The Journal reports that OpenAI employees peppered Altman during the meeting with questions about the boundaries of the agreement and the implications of working with the Defense Department. “I think this was an example of a complex but the right decision with extremely difficult brand consequences and very negative PR for us in the short term,” Altman said.

AI defense tech startup hits $60 billion. Thrive Capital and Andreessen Horowitz are co-leading a multibillion-dollar investment in defense startup Anduril Industries that doubles the company’s valuation to $60 billion, WSJ reports. The California-based company, named after a sword from The Lord of the Rings, builds AI-powered hardware and software for autonomous weaponry. Anduril’s only real battlefield experience—supplying drones in Ukraine—was marred by problems, the Journal reported earlier.

U.S. cyber defense not meeting the moment. As Iran-linked cyber warfare intensifies, the Cybersecurity and Infrastructure Security Agency, the leading U.S. cybersecurity agency, may not be fighting ready, CNBC reports. CISA has lost roughly a third of its staff since Trump took office, it has no permanent leader and its website has been inactive since February 17 due to a funding lapse.

Meta to create new applied AI engineering organization. The unit will partner with Meta’s Superintelligence Lab to build “the data engine that helps our models get better, faster,” Maher Saba, the unit’s new leader, said in the memo. It will be made up of two teams, one responsible for building interfaces and tooling, and a second responsible for executing tasks, generating data and providing evaluations that flow back to their modeling teams, he said.

Israel’s military is targeting the Iranian police state that brutally suppressed protests and killed thousands of people, with the hope of clearing the way for a popular revolt to overthrow the Islamic government. (WSJ)

The U.S.-Israeli attacks against Iran have halted a weekslong rally in U.S. government bonds, pushing the yield on the 10-year Treasury note back above 4% and threatening higher borrowing costs for businesses and consumers. (WSJ)

Kraken told The Wall Street Journal that its banking unit has won access to the Federal Reserve’s core payment systems, making it the first crypto firm to be able to move money on the same rails used by thousands of banks and credit unions. (WSJ)

The WSJ CIO Journal Team is Steven Rosenbush, Isabelle Bousquette and Belle Lin.

The editor, Tom Loftus, can be reached at thomas.loftus@wsj.com.