☀️☕️ AI Market: AMD then what happened?

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• AMD then what happened?

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• Antitrust Down Under

• Climate Costs and Claims

• Oil and the USD

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• 🎓️ GPUs vs CPUs

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📝 Focus

AMD then what happened?

AMD just launched its latest and most powerful GPU🎓 chip, the MI300X, in its latest attempt to chase down Nvidia and challenge its dominance in the AI processor market. CEO Lisa Su unveiled it as "the most advanced AI accelerator," outperforming Nvidia’s current H100 offering. AMD expects the MI300 chip to reach $1bn in sales by mid-2024, which would be at its fastest pace ever.

Nvidia’s current flagship GPU, the H100 (“flagchip”?), has been facing supply shortages as mega tech players like Amazon, Meta, Microsoft and Google fall over one another to use it for generative AI tools, leading to a tripling of Nvidia's quarterly revenues in the latest period.

AMD has long been seen as having a role as, at the very least, the second supplier in the space, whether it successfully catches Nvidia at the leading edge of GPU performance or not. Then again, that’s where it was in the CPU🎓 arena a tech generation ago before it jettisoned its manufacturing arm (becoming fabulously fabless, working with TSMC) and toppling the dominant chipmaker of its era, Intel. 

Strategically, collaborations with Microsoft, Meta and OpenAI (which plans to integrate AMD’s chips in its Triton AI software) do signify a potential shift since it’s not 100% about a chip’s performance horsepower but also how well it works with the developer software that clients need to get the most out of it. AMD's ROCm 6 software platform competes head-on with Nvidia's market-leading Cuda.

..... ▷ Meanwhile, in response, Nvidia ran two new performance benchmarks, one measuring training performance and the second measuring inference performance. 

Nvidia's demonstrations used the new H200 to show off massive performance improvements over older chips along with updated Nemo foundation model framework and TensorRT-LLM software.

Nvidia has more software than hardware engineers and seem confident that strength in hardware, software and integrated systems will keep them firmly at the top. 

 ..... ▷ AMD also lifted its forecast from a $150bn market by 2027 to $400bn as “it’s really clear that the demand is just growing much, much faster”, according to Su, who added, “We think we could get a nice piece of that.”

 ..... ▷ Incidentally, AMD’s Taiwan-born CEO Lisa Su and Nvidia’s Taiwan-born CEO Jensen Huang are, actually, distant relatives.

Su's maternal grandfather is the eldest brother of Huang's mother, i.e. Huang is Su's mother’s first cousin, making Huang and Su first cousins once removed.

Both have publicly confirmed this family connection, with Su describing it as "distant relatives, some complex second cousin type of thing."

This, of course, totally doesn’t hold back either of these fierce competitors in the business world.

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📊 In the Markets

Asian markets on Thursday were soft despite surprisingly strong November trade numbers from China. The trade surplus widened to $68.4bn vs forecasts of $58bn as exports rose 0.5% and imports fell 0.6% from the same month last year. This was really surprising, not only because 1) forecasts from HK/Shanghai’s Finest were of a 1.1% drop in exports and a 3.3% surge in imports but also 2) import data from key exporting destinations like the EU and the US are showing basically the opposite. 

Down Under, Woodside Energy and Santos, Australia’s two giant oil and gas companies, announced that they are in preliminary discussions over a potential A$80bn ($52bn) merger to create a national champion in liquified natural gas (LNG) production. This would be part of the ongoing global consolidation of the sector, but in an Aussie context, the merger would essentially consolidate Australia’s LNG sector into just one company, likely leading to antitrust issues.

European stocks opened and closed down on Thursday on weaker than expected October economic data from Germany, where manufacturers suffered a fifth straight fall in production. Output is now 7% below pre-pandemic levels.

At about the halfway mark of COP28, which is due to end on December 12th, Swiss Re’s widely followed (by insurance types) global claims report showed that severe thunderstorms caused over $100bn in natural catastrophe claims for the fourth year running, and resulted in $60bn in insured damage, which is double the 10-year average. Although overall insured losses dropped by 25% from the previous year, the compounding effect of smaller-scale weather events impacted insurers’ profitability.

Meanwhile… Crude oil and natural gas production in the US both hit an all-time high in September. According to the International Energy Agency, the US accounts for 80% of the expansion in global oil supply this year, which has been a major factor in the weakness of the oil price despite the softening USD (see below) and the OPEC+ output cuts.

In US trading, the Nasdaq traded sharply higher after Alphabet (+5.4%) and Advanced Micro Devices (+9.9%, see above) sparked a megacap / Magnificent Seven rally on fresh artificial intelligence enthusiasm. Google parent Alphabet announced its latest AI model called Gemini, which Google says outperforms OpenAI’s GPT-3.5… though with no mention of performance against OpenAI’s later version, GPT-4, and with continued uncertainty over AI monetisation and the impact on Search. Traders didn’t much care and bought anyway.

The US Dollar and the Oil Price - a mini-explainer

An Inverse Relationship: A weaker US Dollar USUALLY leads to higher oil prices, and a stronger US Dollar USUALLY pushes oil prices lower because oil is priced in US Dollars on the global market (see here for why.) 

• When the “greenback” weakens, it takes more dollars to purchase the same amount of oil, effectively increasing the price of oil. Conversely, a stronger US Dollar makes oil more expensive for buyers using other currencies, potentially leading to lower demand and lower oil prices.

• Also, a weakening US Dollar can stimulate global economic activity and increase demand for commodities, including oil, putting upward pressure on the price. And some investors view real commodities, including oil, as a hedge against the eroding value of the currency.

• However, it's important to note that the inverse relationship is definitely not always the case and many other factors, besides global oil supply dynamics, such as geopolitical events and the growth of the global economy also play significant roles in determining oil prices.

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