Welcome to AI Collision đ„,
In todayâs collision between AI and our world:
- OpenAI does ANOTHER deal
- Is this a slap to Nvidia?
- The quadrillion-dollar age
If thatâs enough to get the alternative dimension open, read onâŠ
AI Collision đ„
If you thought the AI boom was cooling off, think again.
Not only did the market absolutely rip higher on Monday, but a MASSIVE new deal from OpenAI also landed.
This time with Broadcom (NASDAQ:AVGO).
This multi-year deal with Broadcom is to design and deploy 10 gigawatts of custom AI chips.
Thatâs right, ten.
To put that in perspective, itâs the computing equivalent of powering more than eight million U.S. homes, or, in investor language, a half-trillion-dollar infrastructure cycle hiding inside a single partnership.
This is a moonshot for Broadcom.
Once known mostly for networking gear and Wi-Fi chips, itâs now stepping into the elite circle of AI infrastructure kings.
OpenAI will design the silicon, Broadcom will build it, weave it together with its Ethernet and optical networking, and deliver racks of custom accelerators all without Nvidiaâs in sight.
CEO of Broadcom Hock Tan put it bluntly: âIf you do your own chips, you control your destiny.â
The market heard him loud and clear.
Broadcomâs stock popped nearly 10% in trading. Suggestions are this deal could be worth tens of billions in orders. And more importantly, it cements Broadcom as the company every hyperscaler now calls when they want to escape GPU dependence on Nvidia.
As for OpenAI, it’s just another deal in a long line of mega multi-billion dollar deals with just about every major tech player south of the valuation border.
When asked this week why OpenAI needed one more deal, OpenAI co-founder Greg Brockman said,
“We need way more compute power than we’re on trajectory to build.”
The short answer is there is simply nowhere near enough compute power for what’s coming.
It’s a perennial game of playing catch up to AI models that are exceeding the ability for our AI hardware to manage them.
The only thing slowing down the progress of us thanks to the progress of AI… is us.
It does also make me wonder, without OpenAI, where do we get to with AI? Certainly not here, not yet at least. And the market melt-up we’re seeing, likely hasn’t happened either.
Maybe we’re all better off… who knows. What is obvious though is that OpenAI is lifting all boats. And with immense compute demand accelerating, there are going to be winners across the board as this infrastructure out continues for years to come.
For all the benefits of a rise in Broadcom, Nvidiaâs grip on AI compute is still vice-tight, and OpenAI isnât switching sides.
But it is diversifying supply. Itâs still building 10GW of Nvidiaâs new Vera Rubin systems and another 6GW of AMD chips alongside this Broadcom project.
Who they deal with next, well, like I say, just work your way down the valuation list and see who can make chips.
There is a slight twist to this Broadcom story though.
These new chips will run on Ethernet, not Nvidiaâs InfiniBand. Thatâs a direct poke in Nvidiaâs networking dominance (which is arguably Nvidia’s greatest strength) the plumbing that glues every GPU together.
If Broadcomâs Ethernet fabric can scale, Nvidiaâs moat gets shallower. OR at least there’s a new bridge to cross it.
Still, this isnât a zero-sum game.
The AI build-out is so ferocious that even 30GW of compute would barely scratch demand. Every major player is swimming in orders, and this move simply proves the AI melt-up is accelerating.
A single gigawatt-class AI data centre costs $50â60 billion. Ten of them? Youâre staring down $500â600 billion in total spending.
It’s a number so large it makes the cloud boom of the 2010s look quaint. This is why the entire market snapped back from last weekâs âAI bubbleâ wobble investors realised the melt-up is back on.
Broadcom. Nvidia. AMD. Micron. Sandisk. Vertiv. These arenât speculative meme stocks theyâre the companies physically building the new nervous system of the global economy and are rising hundreds of percent in a skip.
And for OpenAI…
This beast is engineering the compute foundations of civilization. Designing chips is what Google did with Tensor, what Amazon did with Graviton. But 10 gigawatts? Thatâs orders of magnitude bigger. Itâs an arms race of transistors, cables, and cooling towers, and at the centre of all of it is OpenAI.
Maybe they’re the greatest thing to happen to humanity… or the worst. Dunno, maybe you can help me decide?
Either way, they’re stacking up billions and trillions in deals to keep this AI boom alive for several more years.
If youâve been waiting for a pullback to âget in,â this might be your last half chance.
The AI revolution isnât peaking, there’s no bubble, things might look frothy but the level of demand for everything AI related is now so entrenched, you simply can’t wind this all back.
Itâs reindustrialisation of the world.
Every data centre, every watt of power, every mile of fibre is a piece of the puzzle, and every company proving it, laying it, making it is making bank from it, and so should you.
So donât ask if Nvidiaâs finished. Ask what you can add next, Broadcom, Micron, Vertiv, even the nuclear and renewables feeding these machines.
Because what weâre witnessing is a transformation in the wiring of the next centuryâs intelligence that will impact every, single, industry, on, the, planet.
This is not a bubble. Itâs the blueprint for the next quadrillion-dollar age.
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Boomers & Busters đ°
AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).
Boom đ
- Cipher Mining (NASDAQ:CIFR) up 32%
- Rigetti Computing (NASDAQ:RGTI) up 31%
- Hut 8 (NASDAQ:HUT) up 18%
Bust đ
- Alibaba (NYSE:BABA) down 10%
- Xpeng (NYSE:XPEV) down 8%
- Western Digital (NASDAQ:WDC) down 5%
From the hive mind đ§
- Are we in an AI bubble? “Or course we are” according to former Intel COE Pat Gelsinger… BUT as he also explains, it has “several years” to run yet. We’re only in the early stages of an industry shift.
- There’s money… and then there’s f*** you money. And then there’s Michael Jordan money. And then Tiger Woods money. And then, oh boy, and then there’s AI engineer money!
- Yep, they look like commando furries in those cat-helmets. But also when you see what they see, it’s like the modern soldier is playing Call of Duty for real life. Andruil is still I think one of the best private companies in the world, its IPO will be huge.
Artificial Polltelligence đłïž
Weirdest AI of the day
ChatGPTâs random quote of the day
“Debugging is like being the detective in a crime movie where you are also the murderer.”
â Filipe Fortes
Thanks for reading, and donât forget to leave comments and questions below,
