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An illustration of US and Chinese flags in front of a circuit board with semiconductor chips.
China wants its companies to ditch Nvidia
Nvidia’s highest-end chips are off-limits to Chinese companies due to strict export controls from the US. That hasn’t stopped developers from either buying lower-grade chips or finding the best chips in underground markets, but that may soon change.
Beijing has reportedly begun urging its private sector to use Huawei’s chips instead of Nvidia’s chips. China’s government hasn’t made an official announcement on the matter — at least not yet. Analysts expect that Huawei’s newest chip could perform better than the China-specific chip currently marketed by Nvidia. Huawei’s chips are nowhere near as advanced as chips from Nvidia or AMD, but they are more advanced than the ones Chinese companies can legally buy.
That all results in Huawei getting a boost in business from China’s domestic AI sector. If it can offer a decent chip for running and training AI models, and the government pressures companies to buy from them, it could be a boon for their pockets and help them develop better tech in the future.
FILE PHOTO: A smartphone with a displayed NVIDIA logo is placed on a computer motherboard in this illustration taken March 6, 2023.
Nvidia’s high-flying earnings aren’t good enough
Nvidia’s earnings reports have become a cultural phenomenon, with super-fan investors even throwing watch parties to tune into how high-flying the chip maker’s marks will be each quarter.
Last week, Nvidia, whose chips have fueled the current AI boom, reported more than $30 billion in sales in the second quarter of its fiscal year, up 122% from the same quarter last year. But even though it beat Wall Street analyst predictions, the stock sagged 7% after the report.
Nvidia’s stock is up 147% since the start of 2024, leading the hottest part of the stock market. While some wonder if AI is little more than a speculative bubble with AI stocks soaring, Nvidia is now the third-most-valuable company globally, and the biggest question each quarter is: How good is good enough for investors?Two hands touching each other in front of a pink background
Hard Numbers: Automate this, Everything’s expensive, Chips delayed, Intel cuts costs, Groq on the rise
106 billion: Capital expenditures from big tech firms are soaring this year, up to $106 billion, according to the self-reported estimates from Microsoft, Alphabet, Amazon, and Meta’s latest quarterly earnings reports. One of the biggest culprits? AI. These companies are acquiring expensive chips, and building out data centers to support their AI and cloud investments. And it may only be the start of a larger trend: Analysts say these figures could keep soaring for the next five years.
3: Nvidia’s latest chips will be delayed up to three months due to a critical design flaw. The chips, part of the company’s Blackwell series, are in high demand by AI companies such as Meta, Microsoft, and OpenAI, which have reportedly ordered tens of billions of dollars worth of the chips.
15,000: Intel announced late last week that it’s laying off 15,000 employees and halting non-essential work. The 15%-staff reduction is part of a $10 billion cost savings plan, the company said. It’s also cutting R&D and marketing budgets for the next two years. While Intel has benefitted from the Biden administration’s CHIPS Act stimulus, it’s not yet a major player in AI-grade chips, trailing Nvidia and AMD, so its business isn’t reaping the benefits of the AI boom — at least not yet.
$2.8 billion: Groq, the AI chip startup, raised $640 million in a new funding round as it seeks to challenge Nvidia’s dominance in AI-grade chips. The new investment, led by BlackRock, valued Groq at around $2.8 billion at the time of the investment. Meta’s Yann LeCun is also joining the company as a technical adviser.
A photo illustration of a smartphone displaying the NVIDIA Corporation stock price on the NASDAQ market, with an NVIDIA chip visible in the background.
A chip bottleneck
Margrethe Vestager, the European Union’s competition chief, has warned of a “huge bottleneck” involving Nvidia. The US semiconductor company plays a pivotal role in designing chips necessary for training and running artificial intelligence models and applications — good for 80% of the market. In recent months, Nvidia has become a $3.1 trillion company — now the third-most-valuable firm in the world behind only Microsoft and Apple.
It’s too much of a good thing: NVIDIA’s chips are so in demand that it can’t make enough for AI firms looking to train bigger and better models. EU regulators are starting to wonder whether that bottleneck raises concerns over fair competitive markets.
In Singapore, Vestager told Bloomberg that the EU’s watchdogs are asking preliminary questions of Nvidia but haven’t made up their mind about any further regulatory steps. Vestager said a robust secondary market could relieve competitive concerns, implying that as long as Nvidia respects smaller firms it should stay in antitrust regulators’ good graces. Meanwhile, AMD and Intel are looking to close the gap with Nvidia, something that intense regulatory scrutiny on the market leader might aid.
Nvidia logo in Taipei, Taiwan.
Hard Numbers: Nvidia soars, Salesforce’s UK investment, step up for your eye exam, More millionaires (more problems?), Apple’s rebound
4 billion: Salesforce is investing $4 billion in the United Kingdom and opening a 40,000-square-foot AI-focused office in London on June 18. The US-based software company said it’ll also run training and upskilling programs for professionals looking to gain AI-related skills.
6 million: Want a 90-second eye exam without interacting with a human? The startup Eyebot raised $6 million for AI-enabled kiosks that’ll do just that. The kiosks perform an eye exam, evaluate prescription lenses or contacts, and any recommended prescriptions are sent to a doctor for final review and approval. The company hopes that this telehealth initiative can be an affordable way for people to get their vision checked, especially those without easy access to professionals.
600,000: There are now 600,000 millionaires in the US, thanks to the AI boom. Atop an AI-fueled stock market boom, America’s number of millionaires jumped more than 7% year over year in 2023. Asia gained about 5% more millionaires while Europe saw a 4% increase.
471 billion: Apple’s stock has rallied since early April, gaining 20% — or $471 billion — in value on the back of investor anticipation of AI rollouts on its devices. The company kicked off its Worldwide Developers Conference on June 10, announcing Apple Intelligence, an AI upgrade to its iPhones that will prioritize certain messages and notifications, offer new writing tools, and boost Siri’s capability as a voice-powered assistant.Malawi's Vice President Saulos Klaus Chilima arrives at a polling station in Lilongwe, Malawi May 21, 2019 in this still image obtained from REUTERS TV video.
Hard Numbers: Malawi VP’s dead in plane crash, Swiss-hosted Ukraine peace summit, Gaza pier aid paused, Nvidia stock split, Snow in Alabama
10: Malawi’s Vice President Saulos Chilima was one of 10 people killed in a military plane crash after taking off from the capital Lilongwe early Monday. The official search investigation launched after Chilima’s plane “went off the radar” was concluded on Tuesday after the rescue team found the wreck in a mountainous area with no survivors.
90: Next weekend, representatives from 90 countries will travel to Switzerland to participate in a peace summit to develop a path for sustainable peace in Ukraine. Russia said it would not be in attendance (not that it was invited), but thousands of military personnel will be on hand to provide security.
2: The UN’s World Food Program halted aid distribution from the US-built pier off Gaza on Sunday, the day after two of its warehouses were reportedly hit in an Israeli military attack to rescue four Israeli hostages – a mission that also claimed more than 200 Palestinian lives. The pier had just reopened after severe water and winds rendered it nonoperational, and the latest pause will only heighten concerns about the worsening famine in the region.
120: Before markets closed on Friday, AI leading chipmaker Nvidia’s stock was selling at about $1,150, but as of Monday, the stock was split tenfold. This essentially divided each share into 10 $120 shares to make it more affordable for investors without diluting the value of existing shares.
450,000: Over 50 pounds of cocaine worth an estimated $450,000 recently washed ashore on Dauphin Island, south of Mobile, Ala. The discovery was made just a day after divers found a similar amount of drugs off the coast of Florida, and a month after $1.2 million worth of cocaine washed up on the same Alabama beach.
AMD chairman and CEO Lisa Su delivers the first AI keynote speech in Computex in Taipei on June 3, 2024.
AMD’s big plans
AMD has big plans to challenge Nvidia’s dominance in the AI chip market. At a trade show in Taipei on June 3, AMD unveiled its MI325X accelerator chip, which will be available by the fourth quarter of the year. It also stated plans to launch two additional chips, one in 2025 and one in 2026.
Nvidia dominates the chip market with about 70% market share, but AMD along with Intel and other chipmakers, want to make a dent in their rival’s sales. Meanwhile, reports suggest that Meta and Google are building their own chips while OpenAI chief Sam Altman is trying to raise money for a chip venture of his own.Google's Gemini home page displayed on a smartphone in a photo illustration.
Hard Numbers: Pay for Google?, Indonesian investment, Amazon walks out on AI, Scraping YouTube
175 billion: Google said it made $175 billion in revenue from its search engine and related advertising last year, but is it ready to risk the golden goose? The company is reportedly considering charging for premium features on its search engine, including AI-assisted search (its traditional search engine would remain free). We’ve previously tested Perplexity, one of the companies trying to uproot Google’s search dominance with artificial intelligence, and you can read our review here.
200 million: The chipmaker Nvidia is teaming up with Indonesian telecom company Indosat to build a $200 million data center for artificial intelligence in the city of Surakarta, according to Indonesia’s communications minister. This news comes weeks after AI played a central role in the country’s presidential election, and it represents a major investment from one of the world’s richest tech companies in a key emerging market as Indonesia seeks to modernize its economy.
1,000: Amazon’s Just Walk Out in-store AI system for cashier-less grocery store checkout relied heavily on more than 1,000 contractors in India manually checking that the checkout transactions were accurate. Now, Amazon has announced it’s ditching the technology, which was being used in 60 Amazon-branded grocery stores and two Whole Foods stores.
1 million: One OpenAI team reportedly transcribed more than 1 million hours of YouTube videos to train its GPT-4 large language model. The company built a speech recognition tool called Whisper to handle the massive load, a move that may have violated YouTube's terms of use. YouTube parent company Google is a major rival to OpenAI in developing generative AI. Google hasn’t filed suit yet, but legal action could eventually come.