Daily: Nvidia triples profits
7.5 min read.
Highlights
Nvidia earnings report. Nvidia’s quarterly earnings report beat investor expectations with profit tripling year-on-year. Despite evidence that the AI boom is still chugging along, Nvidia’s stock price was largely unmoved, with a ~1% bump during the day being offset by a ~1% dip in after-hours trading. The company expects spending on AI infrastructure will hit US$3-4 trillion by 2030, up from US$1 trillion today.
The FT has a timely piece on how Nvidia has committed to US$90 billion of investments across more than 145 companies in the past 16 months. The company is fostering a whole AI ecosystem, which will in turn benefit the firm, which sells the ‘picks and shovels’ of the AI industry.
The FT also finds that Beijing quietly banned an Nvidia gaming chip, which complied with US export controls. Originally aimed at gaming, Chinese developers have been using it for AI development. I don’t think we’re going to get any movement on the H200 deal despite what Jensen says.
Alibaba released a new AI chip that can be used for both training and inference.
Anthropic rents SpaceX compute. Anthropic will pay SpaceX, which recently acquired xAI, US$45 billion over the next three years for compute. Anthropic is desperate for compute given a massive uptick in demand in recent months; the company reportedly invested in compute relatively less than its rival OpenAI in early days of the firms. This also raises questions about xAI’s Grok and suggests that demand is not as strong as expected, since it is not filling out all the compute resources that it had.
Samsung strike averted. Samsung averted a labour strike just 90 minutes before the strike deadline after management and the labour union reached a deal. The contention was primarily over how company profits were being distributed across the business units.
Thanks for reading.
1. Policy and Geopolitics
1.1
FT (05/21): Samsung reaches last-minute deal to avert strike over AI riches
Samsung Electronics workers and management have reached a deal on pay, averting a strike that had threatened to disrupt both the Korean economy and the global artificial intelligence boom.
After days of deadlocked talks, a late intervention by Labour Minister Kim Young-hoon brought both sides back to the table, with a deal finally reached at around 10.30pm local time — just 90 minutes before the strike deadline.
The dispute had centred on the 70,000-strong union’s demand that workers receive a share of the company’s operating profits. Last year, Hynix committed to paying staff 10 per cent of operating profits every year for 10 years, resulting in large discrepancies in pay between the two chip groups.
Under Wednesday’s deal, Samsung semiconductor workers will now receive 10.5 per cent of operating profits. This comes on top of an existing company-wide bonus scheme. The new bonus pool will be split between division-wide payouts and rewards tied to the performance of individual business units. Workers will also receive an average wage increase of 6.2 per cent.
1.2
FT (05/20): China banned Nvidia’s gaming chip during Jensen Huang’s visit
Beijing banned an Nvidia gaming chip while the company’s chief executive Jensen Huang was visiting China with Donald Trump last week, the latest salvo in the superpowers’ battle to dominate AI.
The chip was added to a list of banned goods at China’s customs checkpoints last Friday, according to a copy of the document seen by the FT and two people with knowledge of the matter.
The Nvidia chip, known as the RTX 5090D V2, was introduced last August to comply with US export controls. It was aimed at Chinese gamers and 3D animators but it has also been bought by AI developers, cut off from the most sophisticated Nvidia products.
Trump said on Air Force One after visiting Beijing that China “chose not to” approve the purchases of Nvidia’s H200 chips because “they want to develop their own”.
1.3
Reuters (05/20): Sberbank seeks Chinese chips to power Russia’s GigaChat AI model
Russia hopes to power its flagship GigaChat AI model with Chinese-made chips, Sberbank’s CEO said during President Vladimir Putin’s visit to China, as Western sanctions continue to block the country’s access to advanced hardware abroad.
The bank’s efforts to buy advanced chips from China face stiff competition as China’s biggest internet firms, including ByteDance, Tencent, and Alibaba, are also rushing to order Huawei’s Ascend 950 AI chips.
2. Economy, Finance, and Business
2.1
NYT (05/20): Nvidia’s Profit Hits $58.3 Billion as A.I. Boom Gathers More Steam
Another huge quarterly profit announced by the chip maker Nvidia on Wednesday provided solid evidence that Silicon Valley’s artificial intelligence spending spree is still gathering steam.
Nvidia said profit in its most recent quarter was $58.3 billion, up 211 percent from a year earlier and topping expectations by financial analysts. Just three years ago, the Silicon Valley company’s quarterly profit was $2 billion — about one-thirtieth of what it is today.
Nvidia’s biggest problem appears to be meeting demand from its spendthrift tech industry customers, a strong indication that the A.I. boom is going strong. On Wednesday, the company said annual spending on A.I. infrastructure would reach $3 trillion to $4 trillion in 2030, up from about $1 trillion today.
2.2
FT (05/20): Nvidia’s Jensen Huang bankrolls AI boom with $90bn deal spree
Nvidia is deploying unprecedented sums to tighten its grip on the artificial intelligence industry, committing roughly $90bn to dealmaking over the past 16 months as chief executive Jensen Huang becomes one of the biggest funders of AI groups reliant on its chips.
The world’s most valuable listed company committed about $47bn to investments and partnerships in the year to January 25 and has earmarked a further $43bn in the four months since, according to company disclosures and PitchBook data.
The spending spans more than 145 companies, from AI model developers and cloud providers to suppliers building the infrastructure underpinning the boom. “They are funding everyone,” said a Silicon Valley banker.
2.3
Bloomberg (05/21): The Race to Offer Compute Futures to Masses Has Already Started
Wall Street is racing to turn computing power into a tradable commodity with the first ETFs being filed even before the futures contracts they would track have started to trade.
Roundhill Investments, the boutique firm behind the fastest-growing exchange-traded fund in history, has submitted paperwork with regulators for the Roundhill Compute ETF under the ticker GPUX. The actively managed ETF would hold futures contracts pegged to the price of computing power. Per the prospectus, this includes cloud computing, high-performance computing and storage required to run calculations, process data and train artificial intelligence and machine-learning models.
Last week, paperwork for the ProShares AI Computing Power ETF also landed with the US Securities and Exchange Commission. That fund would aim to track the market for AI computing power, primarily through investments in compute futures contracts tied to graphics processing units, or GPUs.
Both filings arrive just days after an announcement by CME Group Inc. and the index provider Silicon Data teaming up to launch the compute futures market — built on the underlying capacity that powers AI training and inference in data centers. The project is pending regulatory review.
2.4
SCMP (05/20): Why is Chinese DRAM maker CXMT’s IPO attracting so much attention?
The planned listing of ChangXin Memory Technologies (CXMT), the country’s leading DRAM maker, is drawing attention after a recent update of its prospectus with a sharp earnings turnaround, showing how quickly the Hefei-based company has benefited from a global DRAM shortage and rising memory prices.
3. Technology
3.1
Bloomberg (05/21): Anthropic to Pay SpaceX Nearly $45 Billion for Computing Deal
Anthropic PBC has agreed to pay Elon Musk’s SpaceX nearly $45 billion over the next three years for computing resources as part of an expanded deal to support its Claude artificial intelligence software, according to a securities filing.
AI developer Anthropic is expected to pay Musk’s firm $1.25 billion per month through May 2029, with “capacity ramping in May and June 2026 at a reduced fee,” SpaceX disclosed Wednesday in paperwork related to its initial public offering. Either party can end the agreement with 90 days’ notice, the filing said.
3.2
Bloomberg (05/20): Alibaba Unveils New AI Chip for Training and Inferencing
Alibaba Group Holding Ltd. added a new processor to its expanding AI technology stack, enhancing a push to cover every aspect of artificial intelligence development.
The company’s chipmaking unit T-Head unveiled its Zhenwu M890 AI accelerator, equipped with 144GB of GPU memory, at an event in Hangzhou, China, on Wednesday. The hardware will handle both training and inferencing jobs and will be particularly suitable for agentic tasks, Alibaba said. The company now plans to upgrade its Zhenwu chip every year, accelerating the rate to roughly the same pace as industry leader Nvidia Corp.
T-Head has delivered 560,000 units of its Zhenwu product family, and its processors have been deployed by more than 400 external customers, Alibaba said Wednesday. The subsidiary has already won major mobile operator China Unicom as a client, and Alibaba recently said automakers and financial services companies are using the hardware.
3.3
Reuters (05/20): Lam Research opens Austria lab to advance chip packaging, cut costs
Lam Research has opened a research lab in Salzburg, Austria, to advance a chip packaging technology that promises to increase chip density and cut costs, as the company looks to capitalize on surging AI demand for processors.
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