The newsletter today runs a bit short as I’m travelling through the US now.
Highlights
CoreWeave, Super Micro’s strong performance. In a sign positive for the AI boom, CoreWeave and Super Micro gave strong earnings forecasts with the former firm posting record revenue. CoreWeave’s stock rose 13% in after-hours trading.
Pax Silica to expedite trade. US State Department is creating a platform in Panama through the Pax Silica network to expedite AI-related trade between allies. It will certainly include semiconductors, but also other AI infrastructure components and elements including critical minerals.
Compute trading market. One murmuring trend in the past year or so has been the effort to create a market for AI compute. There hasn’t been any successful large-scale efforts yet, but Axios today reports on the efforts underway to make it happen.
Thanks for reading.
1.1
Bloomberg (08/12): US Launches Effort to Speed Trade in AI Goods Between Allies
The State Department said Wednesday that it will create a pilot platform in Panama intended to fast track trade in products essential to AI as part of Pax Silica, a US-led initiative created to strengthen supply chains between allies. In a statement, the agency said it’s committing up to $50 million in foreign assistance funding to develop and deploy the platform, which will use AI technology to speed the logistics process.
“The project is expected to accelerate logistics and compliance operations,” Under Secretary of State for Economic Affairs Jacob Helberg said in an email. “This project is focused on enabling Panama and other participating economies to track and expedite shipments from trusted suppliers of high-value cargo for AI infrastructure, semiconductors, and critical minerals across the entire AI supply chain.”
1.2
SCMP (08/12): Fund backed by China memory giant YMTC invests in push for alternative chipmaking route
A venture capital fund backed by Yangtze Memory Technologies Corp (YMTC), China’s top producer of NAND flash memory, has taken a stake in domestic semiconductor manufacturer SOI Micro, adding a high-profile investor to the country’s push for an alternative chipmaking ecosystem.
Led by a prominent figure in China’s semiconductor industry, SOI Micro is focused on developing fully depleted silicon-on-insulator (FD-SOI) technology – a low-power chipmaking technology that offers a complementary route to mainstream processes.
2.1
Axios (08/12): The push to create a futures market for AI compute
There’s an effort underway to create a futures market for AI compute — the processing capacity needed to train and run AI models — akin to how investors buy and sell commodities like oil or grain.
Why it matters: A compute futures market would bring more transparency, new ways to manage volatility and even more investment into what’s quickly becoming a critical part of the economy.
The big picture: Futures markets allow companies to hedge against swings in prices. If you’re an airline, you can buy oil futures to manage costs. A farmer might sell soybean futures to hedge against declines in price.
2.2
Bloomberg (08/11): Peak Memory Fears Put Focus on Samsung, SK Hynix Cash Returns
Memory-chip makers may have found a new defense against the inevitable cooling of their boom: giving more cash back to shareholders.
SK Hynix Inc. last Friday set a third-quarter timeline for unveiling shareholder-return details, fueling a more than 6% gain in its shares this week. Larger peer Samsung Electronics Co. is expected to follow suit, helping send its shares up 4.1% on Tuesday and another 8.8% on Wednesday. The rallies in the two chipmakers pushed the broader Kospi 5.1% higher on Wednesday. KB Securities analysts including Jeff Kim wrote in a note this week that Samsung could re-rate as it is expected to soon announce a more than tenfold increase in shareholder returns.
Both companies are generating surging cash flows as artificial-intelligence demand strains memory supply. With pricing gains starting to slow, buybacks and dividends could provide the next catalyst and potentially a floor for shares as investors look beyond peak earnings growth.
2.3
WSJ (08/11): CoreWeave Shares Jump as Revenue Doubles From Year Earlier
The cloud-computing company CoreWeave reported its fifth consecutive quarter of record revenue and a sales backlog of $104 billion, a reflection of the continued strength of demand for artificial-intelligence computing.
CoreWeave—which buys advanced AI chips known as graphics processing units from Nvidia, installs them in data centers and leases them to such companies as Microsoft and OpenAI—reported revenue of $2.58 billion for the quarter that ended in June. Analysts polled by FactSet had expected quarterly revenue of $2.55 billion.
Shares gained about 13% in after-hours trading after closing at $90.32 on the Nasdaq.
2.4
Bloomberg (08/11): Super Micro Gives Sales Outlook That Tops Rosiest Projection
Super Micro Computer Inc. shares jumped after the company gave a revenue forecast for the current quarter that topped analysts’ estimates, a sign the booming artificial intelligence market continues to bolster sales of the company’s servers.
Revenue will be $14.5 billion to $15.5 billion in the period ending in September, the company said Tuesday in a statement. Profit, excluding some items, will be $1.01 to $1.10 a share. Analysts polled by Bloomberg projected sales, on average, of $12 billion, and profit of 74 cents. The outlook topped even the highest analyst revenue estimate of $13.3 billion.
San Jose, California-based Super Micro is benefiting from surging demand for gear to train and run AI tasks. The company’s servers are fitted with the Nvidia Corp. chips that have become the workhorse for the vast majority of AI data centers. Super Micro has also been working to boost margins by selling more profitable products and trimming costs.
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Cover Photo by Igor Omilaev on Unsplash
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