Rambling -- On A Friday Night -- August 16, 2024

Locator: 48444CHIPS.

Link here.

When it comes to AI, there are two camps:

• AI is all hype;
• AI is not hyped.

I'm in the second camp.

Exhibit A: Jim Cramer's "Mad Money" -- yesterday, August 15, 2024.

From last month: 

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SoFi

Watch for SoFi tying up with one of the hyperscalers. 

There's an interesting story there but ... apparently the "balance sheet" was so unbalanced, the bank said "no."

That speaks volumes about whether one should invest in a particular company.

But then this:

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Disclaimer Briefly 

Reminder

• I am inappropriately exuberant about the US economy and the US market, 
• I am also inappropriately exuberant about all things Apple. 
• See disclaimer. This is not an investment site. 
• Disclaimer: this is not an investment site. Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them.
• Reminder: I am inappropriately exuberant about the US economy and the US market, 
• I am also inappropriately exuberant about all things Apple. 

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Good Directions

Link here.

AI Revolution Does Not Look Like The Typical Bubble -- August 6, 2024

Locator: 48346AI.

Forbes: excellent newsletter updated the "AI bubble." Great, great newsletter. I would link it but I can't find it on the browser. Pushed out as a newsletter for subscribers. 

From oilprice.com today:

Two camps:

• AI is a bubble;
• AI is not a bubble.

I'm in the second camp.

Earlier today I posted this two-liner:

• AI revolution: more evidence today that the folks who suggest "AI" is a "bubble" do not understand what's going on. One can start here. Or here.

There are many more links that I have in the queue ready to be posted but I simply have run out of time, energy, and interest. When I clean off the desk, I may post them.

Nvidia -- NVDA -- Opinion -- Source -- June 6, 2024

Locator: 48072TECH.

Before we get to the commentary, first this, also from twitter:

Link here from twitter:

With $NVDA becoming the second most valuable company in the world yesterday, I thought it worthwhile to lay out my thoughts both near-term and longer-term depending on your time horizon.

My belief is that over the next 3-4 years, Nvidia revenues are likely to roughly triple from current levels with the stock roughly doubling. However, before year-end we may be near a digestion phase for the amounts spent on AI over the past 1 ½ years since the launch of ChatGPT in late 2022.

In this regard, Sequoia, which is a prominent VC investor in the AI space including a lead investor in the seed round for $NVDA in 1993, did a presentation recently in March. Sequoia estimated that the AI industry spent $50B on the NVidia chips used to train advanced AI models in 2023 but brought in only $3B in revenue. I believe a slowdown in AI spending from the torrid rates seen over the past year will be healthy as companies figure out where this spend gets the return on investment necessary.

Large software vendors that just reported the April quarter such as $CRM, $MDB, $SNOW, $WDAY were optimistic on the benefits of AI to their businesses. However, future expectations were cut despite AI benefits as the economy slows, companies cut back on employees due to greater efficiency and the increased spend on AI is coming out of other budgets.

Even during the buildout of the internet, $CSCO, which became the most valuable company in the world in 2000, went through periods of severe stock declines as concerns rose about internet spend digestion. Cisco’s stock saw declines of 26% in late 1995, 38% in early 1997 and 37% in late 1998 as revenue growth rates while still hugely positive either declined or plateaued. Despite these intra-year declines, the stock was up during each of those years in total and increased ~4000% to its peak in 2000 from the end of 1994.

For perspective, Cisco, the leading enabler of the internet infrastructure buildout, since the end of 1994 (the launch of internet web browser Netscape Navigator) saw its revenues increase over 15x from $434M (Oct qtr of 1994) to $6.7B (Jan qtr of 2001) without ever having a sequentially down quarter. Nvidia by comparison since the end of 2022 (the launch of ChatGPT) has seen revenues increase by “only” over 4x over 1 ½ years from $5.9B (Oct qtr of 2022) to $26.0B (April qtr of 2024). AI spending driven by the biggest companies in the world is healthier today than the early spend on the internet when internet advertising models were unproven.

Obviously at some point an actual contraction in AI spend and stock prices is likely as was the case with the internet spend from its peak in 2000. Cisco’s revenues declined 36% in six months to $4.3B (July qtr of 2001) before starting to grow again while the Nasdaq declined 78% from peak to trough over 2 ½ years (and Cisco’s stock declined 89%.) However, I believe we are years away from that ultimate AI peak build out occurring but we will not know that until time passes much like back during the internet buildout.

Much could be said, but I'm sure we all have our own thoughts. 

Update: Applied Digital, Ellendale, ND; AI, DataCenters Tags Added; US Data Center Average Size, 100K Sq Ft; Ellendale, ND, 340K Sq Ft -- April 8, 2024

Locator: 46955TECH.

The Big View:

• US cities and regions with highest concentration of data centers, link here.

Average size of data centers in US: 

Updates

April 8, 2024: published three days ago, over at DataCenter Dynamics -- this doesn't sound particularly good -- but then I don't understand these things ...

Applied Digital has entered an agreement with a single investor, receiving a $50 million unsecured loan for its data center in Ellendale, North Dakota.

Applied Digital, formerly known as Applied Blockchain, does not mine crypto but provides crypto and high-performance computing infrastructure to miners.

The convertible debenture bears no interest, has an original issue discount of five percent, and has a term of 54 weeks.

Ticker NASDAQ: APLD.

April 8, 2024: next big thing -- converting those empty malls to data centers.

April 8, 2024:

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Original Post

November 15, 2023 -- Locator: 46058TECH.

Big winner in tech today: TSM. Let that sink in. Folks just don't know it yet.

Data center news:

• no update on that new data center in Williams County; dead? Maybe a reader knows.
• meanwhile, Ellendale, ND: 

Applied Digital Corp. has broken ground on its first 100-megawatt high-performance computing facility that will be located about 1 mile west of Ellendale.

The announcement was made Tuesday, Oct. 31, on Applied Digital’s website.

The facility is designed and built for artificial intelligence workloads such as generative AI, natural language processing, machine learning, rendering and traditional high-performance computing applications.

There will be 80 megawatts of IT (information technology) load but it's designed so that every rack in the building can be within 30 meters of the network core.

Meanwhile, to recap:

MDU - ATLAS -- February 29, 2024

Locator: 46629ATLAS.

Link here. Archived here.

This story was behind a paywall over at The Bismarck Tribune. From the linked article:

A major North Dakota utility -- MDU -- says it is being overcharged by a regional grid operator -- SSP -- for the electricity demands related to a power-hungry cryptocurrency mine  -- Atlas -- in the northwest part of the state -- Williston. These costs are being passed on to ratepayers.

Bismarck-based Montana-Dakota Utilities filed a complaint with the Federal Energy Regulatory Commission in January. The issue is not the demand from the crypto mine itself, but rather the costs for the strain that MDU says the mine's operations are putting on a power line which travels from Grassy Butte to Watford City and serves some of the utility's customers in northwest North Dakota.

This strain creates congestion which occurs due to constraints on transmission infrastructure. It happens when the lowest-cost power cannot be sent to customers without overloading a line, leading to higher prices and causing utilities to sometimes curtail electricity.

MDU says it started incurring the excess costs after the Atlas Power Data Center went into operation last year. That is a 200 megawatt facility which is expected to use 700 megawatts once buildout is complete. It is powered by Mountrail-Williams Electric Cooperative. For comparison, many recently approved wind farms in North Dakota produce around 150 megawatts of power.

Getting charged for congestion when it happens is normal for a utility, but MDU alleges it is being charged twice for one problem by the Southwest Power Pool, a Regional Transmission Organization that manages the grid -- a market where power is bought and sold. MDU is a part of the Midcontinent Independent System Operator, another Transmission Organization, but entered into a contract with SPP, paying it to use some of SPP members' lines in northwest North Dakota......

SPP disputes MDU's complaint in its filings. An SPP spokeswoman declined further comment citing the pending case and pointed the Tribune to its FERC filings.

The first congestion charge comes from the contract MDU has with SPP, and the utility does not object to it. But the second comes as the result of an agreement between SPP and MISO to establish a "market-to-market" mechanism. Energy demands in one RTO region can have large impacts on another due to their proximity. Market-to-markets are put in place to manage this. In this case, SPP used the mechanism to levy a charge against MISO that signaled the need for its members to turn on more electric generation, according to State Public Service Commission Analyst Adam Renfandt. This charge got passed on to MDU. Market-to-market agreements are in place for lines across both RTOs' footprints, ranging from North Dakota to north Texas.....

Much, much, much more at the link.  

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That's All Very Interesting, But Look At This

Link here.  

Governor Doug Burgum is welcoming crypto mining and data center companies into North Dakota, saying in a January 2022 news release that it will diversify the state’s economy and attract high-paying jobs. However, these companies have come under scrutiny for a variety of reasons, including their high energy use.

Although there are likely close to a hundred crypto mining operations in North Dakota, the six largest ones are Applied Digital with locations in Jamestown and Ellendale, Atlas Power Data Center in Williston, Rainbow Energy in Bismarck, Core Scientific in Grand Forks and Bitzero in Nekoma. These places house many servers with high computing power, requiring much energy to run.

“This major investment in North Dakota will further cement our state’s growing reputation as a hub for data centers and cryptocurrency mining, thanks to our incredibly reliable, affordable and redundant power supply and a climate that lowers cooling costs for data center operations,” Burgum said in the same news release.

North Dakota is considered one of the best states for crypto mining because of its low energy prices, stable energy grid, cool winters to keep the machines cold, low taxes and less government regulation. Commerce Commissioner Josh Teigen said these centers benefit North Dakotans by providing jobs, increasing revenue to the state through taxes, and helping the energy grid...

The top three data centers in North Dakota together consume nearly as much power as every home in the state, according to the New York Times. However, Teigen said these companies are not taking power away from North Dakotans because the state exports over 90% of its electricity.

“We’re never going to see a case where a hospital loses power but the data center is still running,” Teigen said. “There’s a hierarchy of if curtailing needs to happen, what that priority level looks like and data centers are usually, especially on the crypto mining side, the first ones to get shut off.”

A spokesperson for the crypto mining center Core Scientific said it powers down its computers to conserve energy depending on the needs of the local population.

In northwest North Dakota, Atlas Power is being built by FX Solutions Inc. and is set to be the largest data center in the world. However, on June 20, the Williams County Commission told Mountrail-Williams Electric Cooperative to cut power to Atlas for not complying with building codes.

Much, much, much more at the link. And, not behind a paywall.

Data Center News -- November 15, 2023

Locator: 46058TECH.

Big winner in tech today: TSM. Let that sink in. Folks just don't know it yet.

Data center news:

• no update on that new data center in Williams County; dead? Maybe a reader knows.
• meanwhile, Ellendale, ND: 

Applied Digital Corp. has broken ground on its first 100-megawatt high-performance computing facility that will be located about 1 mile west of Ellendale.

The announcement was made Tuesday, Oct. 31, on Applied Digital’s website.

The facility is designed and built for artificial intelligence workloads such as generative AI, natural language processing, machine learning, rendering and traditional high-performance computing applications.

There will be 80 megawatts of IT (information technology) load but it's designed so that every rack in the building can be within 30 meters of the network core.

Meanwhile, to recap:

New Home Page For Tech -- Let's Spend Some Time On Semiconductors, Chips, AI -- July 4, 2023

Locator: 10001TECH.

Note: as of August 14, 2023, this post now becomes a "page" tabbed at the blog. 

Updates

June 5, 2024: chip companies have huge day on the market today. Perhaps many, many reasons, but this is what caught my attention: TSM may get ASML etcher this year. Link here.

May 16, 2024: TSM as a foundry.

April 13, 2024: 3 nm / 2 nm CPU and GPU update.

April 13, 2024: M4 update, the 3-nm chip, and the 2-nm chip.

April 8, 2024: all the talk today on CNBC was with regard to 2 nm. In fact, Apple is already taking about 1.4 and 1.3 nm chips. See below. A reminder: INTC says they need more cash from the government.

April 8, 2024: CHIPS Act -- $11 billion for TSM announced today.

March 26, 2024: SK Hynix GPUs for Nvidia chips; $4 billion investment in Indiana.

March 12, 2024: 2 nm (Apple-TSM).

January 18, 2024: an inflection point.

January 14, 2023: TSM earnings call; focused on 1.3 nm.

December 14, 2023: 1.4 nm.

December 3, 2023: Supercomputers and all that jazz. Great update.

December 2, 2023: Nvidia Grace Hopper 200.

October 30, 2023: M3 announcement.

September 10, 2023: investing update.

September 5, 2023: QCOM, AWS, INTC, link here.

August 29, 2023: generative AI is tracked here.

August 14, 2023: the fourth update of CPUs, GPUs, cores, and threads.

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Original Post

Chips, transistors: link here.

Publicly traded companies:

• complete list, link here.
• Apple not listed;
• Xilinx listed; no longer publicly traded; bought by AMD
• excellent list, Yahoo!Finance; ranked by market cap;
• seven best to buy in 2023: link here, current, June 21, 2023. Based on YTD returns which seems a very, very poor way to come up with top seven, but here we go:
• NXPI, QCOM, MPWR, INTC, NVDA, TSM, AMD

Browsers: link here.

Tech 101:

• how the value chain works, link here: