Today's number: 120 million. That's how many dollars Alex Cooper spent on a Colorado compound, which used to be the home of a silent monk community. Peloton investor relations say they support the transaction, but have requested that the vow of silence be made transferable.
Welcome to Profit Markets. I'm Ed Elson. It is January 7th. Let's check in on yesterday's market vitals. The major indices all posted strong gains. The Dow notched its first close above 49,000. The S&P 500 also hit a record closing high. Meanwhile, oil prices gave up Monday's advance. And finally, gold, silver, and copper extended their rallies. Okay, what else is happening?
The biggest celebration of consumer tech, the Consumer Electronics Show or CES, kicked off in Las Vegas this week. It is an opportunity for tech companies to showcase their latest innovations. And so far, it is Nvidia that is dominating the headlines. Nvidia's CEO, Jensen Huang, opened the event with an announcement that their most advanced chip yet, the Rubin model, is in full production. He also introduced AI models for autonomous vehicles, and he said, quote, 'The ChatGPT moment for physical AI is here,' and it appears to be happening fast because Mercedes-Benz will begin shipping cars with Nvidia's technology this year. So, lots happening at CES. We wanted to get a sense of what else is happening. So, we are speaking with someone who was there right now. Alex Heath, author of the Sources newsletter and host of the Access podcast, joins us from Vegas. Alex, welcome back and happy new year.
Happy new year, Ed. I am doing CES like I always do, which is I try to avoid the show floor as much as possible, but I am managing to head over there right after this conversation. But I've gotten a good lay of the land from the hotel rooms and restaurants where all these meetings are happening, which is actually like the shadow CES. It's this like the second show that happens at all the hotels on the strip that I find to be much more interesting. But yeah,
I've never been to CES. For those who don't know what it is, what is it? What's going on over there?
I mean, it started as the place where Apple and all these companies would show off their new hardware and gadgets, right? And then all the tech companies got big and started doing their own events. And I would say in the last decade especially, it's been more relegated to a lot of companies outside of the US that see it as an opportunity to kind of make a splash here in North America to start the year, and a bunch of smaller startups, and a lot of vaporware and a lot of blowware and stuff that will never ship or never see the light of day. But you know, if you squint, you can see real things. It just gets increasingly harder to do that every year, is my experience.
So far, what are the real things that you've seen? We're seeing headlines over here about what Nvidia is doing, specifically their Rubin chip and the plans with AI-enabled cores. That's what I'm seeing here in New York. What are you seeing? What's real at CES right now?
Apparently, the Nvidia autonomy thing is real. I mean, they're shipping. Jensen said on stage yesterday, Monday, to kick things off, that they'll be shipping with Mercedes in Q1 in the US. I'm not sure how big of a pilot that is actually, but I would say that was the thing that a lot of people were buzzing about around all the cocktail parties in the evening after Jensen's keynote was, you know, is Nvidia going really for Tesla and full self-driving and competing with Elon, who is one of, if not, you know, top three or four biggest Nvidia customers of GPUs, right? And the read I got was actually that Nvidia doesn't see autonomy as a business for itself in its own right necessarily, right? Because they're open-sourcing the underlying model, they're wanting it to be a little bit more of like an Android-type approach where they work with a lot of different car manufacturers.
I think it's a way for them to get data, which Jensen talked about a lot on stage, and inform the way that they build future chips for their customers. I think they do things like autonomy or robotics not because they see those verticals as a business akin to selling GPUs, but because the more specialized and vertical they go in certain domains, the more they learn, and it's a flywheel that then informs the way that they develop their bread and butter. And I think that's a thing about them that maybe is not more broadly understood, but I was just hearing from Nvidia employees and other people in the AV space last night is that they're not actually coming for, you know, Waymo's lunch here. And I thought that was pretty interesting.
Yeah, that is interesting. And you know, look at the stock, Nvidia's stock today, which is basically flat, actually kind of slightly down. And I don't know if that's anything to do with what's been said at CES, probably not. But what we're basically seeing is that they've come out with this pretty big deal news announcement, at least as an observer. I mean, the video of a Mercedes driving around on Nvidia's AI seems like a big deal, but the market appears to be either already pricing that in or it's not that interested.
Maybe the market understands what I was saying, just that it's not going to be a big business for them, and that it's also early, right? And they are behind Tesla tremendously in terms of like the data that FSD has and all of the miles that Teslas have driven, which Elon was quick to jump in and point out on X, I saw, after the keynote. The only other real fun piece of gossip here after day one at CES is the timing of that Jensen keynote, and I don't know if you got to watch the whole thing. It was unusually rushed feeling, unusually like, I don't know, there were like technical difficulties. He had to stop and start. It wasn't as polished as he normally is. And the rumor here in Vegas is that that whole thing was very hastily thrown together to upstage AMD, his, I believe, cousin Lisa Su, right? Of AMD, who was doing the actual CEO's, the actual mainstage CES keynote later that evening. And so you'll notice like Nvidia wasn't on the official CES stage. They were doing their own thing at the Fontainebleau. And he did the official keynote, I believe, last year to kick things off. And like, you know, Lisa is doing it this year, and AMD is kind of having a moment. She brought out Greg Brockman from OpenAI. And I think they wanted, I think there's still that super competitive dynamic, and he wanted to upstage her, as is the fun gossip out here.
Based on what you've seen so far, would you say that there is an overarching theme to the pitches and the presentations that we're seeing right now? I would assume last year it was AI. I'm sure it's still kind of AI this year, but if you could sort of describe what the theme is, what are people aligned on?
A lot of AI wearables, a lot of like rings that you talk to and leave, you know, voice notes into. AI glasses, display glasses. Meta is here in a pretty big way talking about their glasses. A lot of robotics, most of which to me looks like vaporware. Most, you know, it wouldn't be CES without all these, you know, demos of humanoids like doing things in kitchens or whatever. And like I've seen that so many times that it just kind of, I'm numb to it. And until I start seeing these robots like out in the real world, I just don't believe it. And so there's a lot more of that this year. People seem to, I mean, Jensen was saying this in the keynote. I think he said like the ChatGPT moment for physical AI is coming. He's been saying that for a while. It does feel like things, because of how good the models are getting, that things are starting to converge, and maybe we will actually see a real kind of robotics, even humanoid-type moment. I don't know if it's going to be this year, but there's a lot of companies here showing that off, at least the demos of it. The only other big thing, and this is happening when we're recording on Tuesday later tonight, is Lenovo is here in a very big way, which is the number one PC maker in the world, and they've not really had a big CES presence, and they're a pretty low-key company, but you know, we've got hundreds of millions of devices, and they are taking over the Sphere and announcing this big, you know, AI product offering for all of their PCs that chains together a lot of different AIs and partners like Notion or Perplexity or whatever to create this proactive, more natural language, context-aware AI on your PC. And so a lot of people focusing on how do we take AI out of the chatbot and actually put it into either your PC, your wearable, your car, a robot, and make it a little more useful than just talking to a chatbot.
Yeah, just slightly pivoting here. Something that happened while we were gone for break that we haven't been able to cover, which I want to bring up to you now, is this deal between Nvidia and Groq, this chip startup. Nvidia bought the company for $20 billion, its biggest purchase ever.
Fake bought it. So that's the other side to this. They frame it as a deal, this licensing agreement. It looks a lot like an acquisition to me, I guess. Please take it away. What is actually going on here?
I call these reverse acqui-hires, and I'm glad that the name has actually stuck since I coined it about a year and a half ago. But it's this stuff that the big tech players are doing where they take the key talent from a lab, do a non-exclusive IP license for the tech because they don't actually care about the tech, they care about the talent, and leave the kind of flaming husk, if you will, of like the thing left behind. And I think Groq's in a little bit of a different spot because they have a pretty fast-growing, lucrative cloud AI inference business that they're going to continue to run, and they've got a ton of GPUs, and I think they'll have a lot of inbound there because there is just still so much demand for that. But yeah, Jonathan Ross, the founder, and his kind of core technical team going over to Nvidia to, you know, from my understanding, address what Nvidia sees as a huge issue, which is, you know, its GPUs are very good for training, but AI inference, which is running AI in the real world in production, right? So when you prompt ChatGPT, that is doing AI inference. They're behind there. Their latency is not very good. There's all these startups like Groq was spinning up to take that market, and the workloads are moving to inference, they're moving to production. All the things we were just talking about, Lenovo, the robots, that's all inference. And so I think they see that as the next major wave for their business. And Jonathan and the team there will help them fix those issues with latency for inference. But yeah, that deal is super unusual. I mean, I reported in Sources it happened in under 10 days. Jensen wired the money early. He wanted it done before the new year, probably for tax reasons or something, or maybe because he was just antsy. I don't know. And went from like really not knowing Jonathan, the founder of Groq, at all to doing the deal in like a matter of just a few months. So Jensen is in founder mode 100%. And when you look at all the cash that Nvidia has on its balance sheet and the rumors about them looking at other deals, I expect this is just the beginning. I expect they'll keep doing deals. Maybe not $20 billion, but I think they'll keep doing big deals.
So interesting that we keep seeing this theme that there is exactly, you say, the reverse acqui-hire theme. I mean, just thinking back to Microsoft and Inflection, where the same thing happened, and they have this deal, and then all of the talent goes over to Microsoft, and then what do you know? The founder of Inflection is now the CEO of Microsoft AI. And I assume something similar is going to happen with Jonathan Ross. Something so interesting that you reported is that he told you that they had no intention of being acquired. He said, I read the quote that you reported. He said to you, quote, 'We have no intention of being fake acquired or real acquired for that matter.' He literally predicted precisely the opposite of what happened.
What do you make of that?
I mean, I love it. You know, if a founder tells me something like that and I have the ability to remember, that's the thing. I was like, it's harder to remember these days. But when I remember, oh, I had this conversation, they said that, I dig it up. And yeah, this was over a year ago. You know, it was actually the same day that Google reverse acqui-hired Character.AI, which was something people have probably forgotten about by now, but was another one of these multi-billion-dollar deals. And yeah, I asked him about it in the interview that day, and he was like, 'Yeah, we're not going to be fake acquired.' And then you know what? $20 billion had something different, you know, to say about that. I guess everyone has their price, right?
Exactly. It seems like this continues to be the theme where, as the founder of an AI company, you're saying we're going to take over the world, we're going to take on big tech, we can do it ourselves. And then someone shows up with a ridiculously large bag of money, at which point you kind of shut the [__] up and take the money and you go home.
I mean, we were talking about all this just, we were talking about all these, you know, AI researcher comp packages over the summer, right? With which Meta was doing. Jonathan, the founder of Groq, is probably considered top three to five greatest minds in the world on chips. He's the only, he invented the TPU at Google. He's invented the Groq chip, and now he's working at Nvidia. So he's one of the only leaders to have touched all kind of three major chips, and I think for Nvidia, that's worth it.
