00:00This is another mega deal involving OpenAI. What do we know about it?
00:04Yeah, there are a lot of deals going on in AI right now, and OpenAI really is at the heart of so many of them.
00:10So, OpenAI has been, Sam Altman and OpenAI have been diversifying their suppliers in a number of key areas.
00:17In the chip space in particular, everybody is pretty dependent on NVIDIA.
00:20Of course, NVIDIA is now the most valuable company in the world.
00:23Partly that's because everybody has to buy their chips to be able to train these AI models
00:27and mostly to run them so far. That's given them incredible margins, huge profits, and revenue growth.
00:34So, in this case, we're seeing Altman and OpenAI trying to diversify on the chips front,
00:38where they've looked at AMD, one of the competitors to NVIDIA in the past,
00:43and now they're talking with Amazon about using Amazon's chips within their operations, too.
00:48That would probably bring their costs down a fair bit,
00:50and it makes it more competitive for NVIDIA to be able to bid and get its chips into the OpenAI data centers.
00:55But, you know, what does this mean for Amazon's AI chip ambitions?
00:59Because this is something that they've also highlighted.
01:01They've been trying to push this very hard.
01:03Amazon, of course, is the leader in cloud computing services,
01:06the traditional variations that we saw before AI services.
01:09Now, you're seeing a lot of competition in AI cloud services in particular,
01:13and Amazon is a step behind.
01:15They're trying to use their chips, the Tranium chips, to be able to catch up a bit.
01:19They think that that's a valuable offer for a lot of the AI companies out there,
01:22and they think that this would be, you know, a significant step.
01:25Being able to get OpenAI to be able to buy these chips would be a big step forward for them.
01:30In China, another homegrown chip company having a hugely successful IPO.
01:35What do we know about MetaX?
01:36Yeah, not to be confused with Meta, the company in California.
01:40This is MetaX.
01:41It's a chip company that just went public in China.
01:44And you're seeing some incredible stories within the Chinese chip space,
01:48speaking of competition in AI chips.
01:50So, MetaX went public.
01:52Its shares went up almost 700%.
01:54Its market cap is now $47 billion.
01:57It's a big company.
01:58It's significant.
01:59And most of us have never heard of it before.
02:01This comes just shortly after another company.
02:05More threads went public.
02:06It also reached a valuation of about that level.
02:08So, I think it shows the intense retail interest,
02:12retail investor interest in these kinds of chip companies within China,
02:15because they know that most NVIDIA chips cannot be sold into China at this point.
02:19There's a big opportunity for local players to be able to supply the local market
02:23and make some big revenue from it.
02:25The multiples on these stocks, though, are kind of out of this world.
02:28Much higher than NVIDIA's.
02:30Peter, I mean, it was almost like a year ago that, you know, we heard about DeepSeek.
02:34And people in the know really knew about it.
02:36But some of, like, you know, the common mortals hadn't really heard about it.
02:40What do we know so far about where China is with chips and AI?
02:44Well, they're making progress.
02:45They're still very far behind, I'd say, on both of those fronts, particularly on chips.
02:49They have a long ways to catch up to NVIDIA.
02:52You've seen CEO Jensen Wang make the case that he wants to be able to sell more chips into China.
02:57He got the blessing to sell these H200 chips.
02:59But there's still a market there, and they're still quite a bit behind.
03:02On the AI services front, it's quite a bit different.
03:05DeepSeek, Alibaba, the other leaders within the China market are really taking the open source route.
03:10They're looking not so much at building these enormous data centers and trying to make a lot of money from those services.
03:16They want to do open source.
03:17They want to go lower cost route to be able to get AI integrated into business operations much more quickly.
03:23That, of course, is with the support and the blessing of the Beijing government.
03:26But, Peter, when you look at how they're trying to actually spur domestic demand for chips,
03:31I mean, is this going to be the big story for China in 2026, that this will be a success?
03:36They're making progress, and this is a big policy debate in Washington right now,
03:40whether the Chinese domestic players really led by Huawei Technologies, to be clear.
03:45Huawei is really the leader.
03:46There's a smaller company, CameraCon, that is also competitive within that space.
03:50But they're going to be the leading providers.
03:52They need to have their chips manufactured by SMIC, which is kind of the TSMC of China.
03:57They're quite a bit behind TSMC, unfortunately, for those companies.
04:00So we'll see whether they're able to make progress.
04:02The argument from Jensen Long and David Sachs in the White House is they're going to be forced to catch up on the domestic front
04:09if we don't supply them some of these chips, and that would taper their interest in buying domestic chips.
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