Billionaires Beg for AI Chips Over Sushi
By Charles Mizrahi
Founder, Alpha Investor
Banyan Nation,
“An hour of sushi and begging.”
That’s how Elon Musk (net worth: $210 billion) and Larry Ellison (net worth: $138 billion), founder of Oracle, described their lunch.
Musk and Ellison don’t have to beg for much in life.
They are usually on the other side of the begging … most people need something from them. But this time was different.
In Nobu, a Japanese restaurant in Palo Alto, California, Musk and Ellison were begging Nvidia’s co-founder/CEO Jensen Huang for his company’s H100 — Nvidia’s advanced chip.
Nvidia made billions of dollars selling graphics processing units, or GPUs, for PC gamers.
The company’s graphic cards were able to provide gamers with the sharp resolution and faster refresh rates they desired.
Researchers found out that Nvidia’s GPUs were excellent for AI computation.
Generative AI requires crunching enormous amounts of data that only these chips could do.
With the release of ChatGPT in 2022, the demand for Nvidia’s GPUs was running way ahead of supply.
In early May of this year, Musk said: “GPUs at this point are considerably harder to get than drugs.”
Nvidia now accounts for more than 80% of the AI chip market.
Its latest earnings report was nothing short of amazing. Revenue in the latest quarter was more than 3.5X the level a year earlier. Profits rose nearly 9X.
In 2017, Nvidia’s market cap was $100 billion.
The current market cap is now more than $2 trillion, as the stock price has soared 6X in the past 16 months.
On the earnings call, Huang said how every company is working on their proprietary generative AI.
He concluded by saying: “Now every industry is on board.”
And I couldn’t agree more…
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AI Set to Revolutionize Industries
AI is going to transform almost every industry — mostly for the better.
It will give us far greater levels of personalization, efficiency, productivity and insight. It’s projected that AI could spur $15.7 trillion in economic growth by 2030.
And with AI, there’s a trillion-dollar industry projected to grow to $16.6 trillion in the next four years.
It’s an industry that’s not getting much press or investor attention.
The stock prices of many companies in this mega trend are not soaring by leaps and bounds…
That mega trend is: Fintech (financial technology).
“Fintech” really just means any technology that makes finance easier. So, fintech companies use this technology to create new applications that Main Street can actually use and trust.
AI is being used in fintech for fraud detection, risk assessment, algorithmic trading, and customer service (chatbots).
Right now, only one in seven transactions are done digitally. There’s a huge runway for growth.
In fact, cash and checks are still used for 80% of the world’s retail transactions. In the U.S., more than half of all transactions under $10 are in cash.
Based on my research, the transition to a “cashless” society is still in the early innings.
The Financial Plumbing Powering the Digital Economy
Most major banks have shifted their focus to products and services that cater to the needs of big, billion-dollar companies.
That’s how they can profit from raking in fees.
But this means that small and medium-sized businesses lack options for banking and managing their day-to-day financial needs.
And that’s where fintech companies like Visa Inc. (NYSE: V) come in.
Visa was the world’s first modern credit card. Now, it’s the financial plumbing that makes digital payments possible.
I recommended Visa in my Alpha Investor newsletter because it’s dominating the digital economy.
To see how you can read the full story about Visa and get more of my fintech and AI recommendations, go here to see how.
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From Banks to Your Living Room?
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Regards,
Charles Mizrahi
Founder, Alpha Investor
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