Moore Threads IPO and the future of the GPU market

CGTN Europe

CGTN Europe spoke to Santosh Rao, Head of Research and Partner, Manhattan Venture Partners.

Transcript

00:00Well, Santosh Rao is head of research and a partner at Manhattan Venture Partners.

00:05Great to have you back on the program.

00:06Why do you think that MoreThreads has been so oversubscribed?

00:13Thank you. Thank you for having me.

00:15Well, you know, oversubscribed is totally understandable.

00:18After hearing all the news that the stocks are up 1,000%, 500%,

00:23nobody wants to miss out on any AI opportunity.

00:26And this fits right in. And this is at ground zero, which is the GPU chips

00:32that really are powering the AI revolution, so to speak.

00:35So I think this is totally understandable.

00:38If I was there, I would have bought it too. I would have stood in line too.

00:42Because this is a great opportunity.

00:43We don't know where the AI dust is going to settle, but everyone wants in to be in this ride.

00:49So totally understandable. It's a good company.

00:52It's good for China, good for the chip industry as such,

00:55that a new innovative company is coming into play.

00:58And it will cause more innovation, more development, more developers.

01:02So it's good. All good.

01:03Well, as you say, everyone wants a piece of this.

01:05And it's backed by Tencent, ByteDubs, GGV Capital, Sequoia China.

01:09But the company still isn't profitable.

01:12Can they really smash NVIDIA's near monopoly status?

01:15It's going to take a long time.

01:19NVIDIA is a veteran player, so to speak.

01:22They're also a generation or two ahead of this company yet.

01:25It's going to take some time.

01:26But they're following the same trajectory, so to speak.

01:28And he formerly worked at the CEO, formerly worked at NVIDIA.

01:32So it started as a gaming chip company, and now it's moving into AI.

01:36So it's totally, it'll get there at some point.

01:39It has the captive audience of China, which is a huge market.

01:42And it has the state government behind it.

01:45So all that is good.

01:46The good tailwind for this company, it has nothing to lose but everything to gain at this point.

01:53So it'll get there at some point.

01:54But initially, I think NVIDIA definitely has a lead on everyone right now.

01:58They are the incumbent leaders.

02:00And they will maintain that.

02:02Santos, how else is China's AI boom visible on stock markets?

02:07Well, you know, China is pretty much, it doesn't affect NVIDIA at all.

02:13It's China, it's really China specific.

02:16And they export to a few other countries outside.

02:18But I think it's essentially the big NVIDIA and other ones here, Broadcom and all that here.

02:24So it doesn't affect the overall Western stock markets.

02:29It doesn't affect China and the nearing area, the areas around China.

02:34But I don't think it affects total oil.

02:36It's not going to disrupt the stock market, so to speak.

02:39But it definitely will kind of spike up the Chinese market because this is a great company to be in.

02:46It's surely impossible for all AI-related companies to end up dominating the market.

02:51So what will happen, Santos, when the AI bubble bursts?

02:54Yes, so you're going to see what happened during the dot-com bubble.

02:58So you've got so many companies out there, but only a few came out of that.

03:02Only Amazon, Netflix, and whatever, a few big leaders, eBay, and all that, a few came out.

03:09And the pets.com and this.com and that.com, they just went by the base side.

03:13So you're going to see that.

03:14But in this case, I think there are value use cases for the technology,

03:19unlike in the dot-com era where everything was hope and pray for what it can do in the future.

03:24But here, you're actually seeing applications of it.

03:27So you're going to see a few players.

03:29Some will drop off, but a lot of them will wait.

03:33And then it's going to be more M&A and all that, consolidation and all that.

03:37Everyone is specific, specialization in certain areas.

03:40So classic M&A, consolidation and all that will happen down the road.

03:44But at this point, everyone's going for, is taking their claim to this whole pie.

03:51And someone will win, of course.

03:53But right now, it's just about land grab and get in there and establish a presence there.

03:58So we don't know yet.

03:59It's only second or third innings of this long game that's going on, AI.

04:04A lot of transformation still to happen.

04:06A lot of adoption still to happen.

04:08A lot of applications still to come.

04:09So it's still a very early game, but the stakes are set.

04:13The valuation may be at a bubble area, but AI technology is not a bubble.

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