Power Lunch panel weighs in on AI chip competition heating up

We’ve got Steve Kovac here. Threat Sethi still with us. What Larry Fink was talking about was this AI Halo that is supposed to touch many other industries. Energy is certainly one of them. Software would be sort of an obvious next place to go, but I want to show you a chart of the software ETF versus the SMH chips ETF and just huge discrepancy between the both. We haven’t really seen this AI Halo expand beyond the chips and the mega caps. Or would you disagree with that Sir? No, no, I totally agree because we haven’t really seen it implemented yet. Right, right. Companies have not really come out yet and said, oh, our productivity is increasing because of AI. So you know you’ve got Microsoft with Copilot and you’ve got these other companies, but it’s to your point, it’s the mega caps and it’s the chip companies right now. But until we see it being used we have to kind of make sure and to like everything’s point like if we don’t have the infrastructure there I’m not sure you’re going to actually get it to be used because the power needed for that and that’s the competition amongst all the chip companies. Right. Why does AI require all that power. It’s the chips. So these it’s, let’s just talk about those NVIDIA chips. They require enormous amounts of power. They’re not the most efficient chips in the world, unlike the one that runs in her iPhone. They need these big run in these big data centers that take up a lot of power. And you know, Intel had that announcement earlier this week. They were talking about the power efficiency for their Gaudi chip, their AI chip that they’re gonna start selling soon. Just saying it’s more power efficient than the NVIDIA stuff. So you save money not just on the chip itself, they’re saying, but also on the power goods. Here’s a stop that broke it down to me. I hope I’m getting it right. But a ChatGPT query takes, I think, 10 times more compute power than a simple Google query. Wow. So if you think people are going to get it because it has to run through all those, those those series, all the different algorithms that it’s running through. So it’s trying to, in fact, incorporate everything else there. So what you’re really going to need is much more energy. You’re going to utilities to get more power, you can need more gas and you’re going to need data centers. This is what we hear. CEO Sam of Open area. Sam Altman talking about a lot. In fact, he was in the Middle East this week talking about this very problem builds the data center, it’s who builds It could be many people. I mean, it’s the companies, the companies themselves do it. Amazon’s the exactly companies like Digital Realty and the real estate. And you have Equinix that also has the interconnection. So you’ve got all these other companies, but well, you need the power behind it. So it’s what are the utilities in California, right. So it’s the Edisons, the ESS of the world, but it has not enough kind of, yeah, it they have to come together. There’s an interesting article and the journals heard on the street today saying how you can use AI to actually make the grid more efficient and household consumption more efficient. So maybe this will all work together. All right, let’s talk about Apple bucking that downtrend today. As we just mentioned a moment or so ago, yesterday its best day since last May, up 3% for the week. Steve, why the move in Apple? Is it too about AI? A little bit. I know Sarat has some other thoughts on this, but let’s just talk about the AI angle here for a second. So yesterday Bloomberg had this report that came out that said Apple is preparing to update its Mac computer chips and going to kind of frame them as AI chips, unleash some new AI capabilities on these devices later this year. But of course none of that really matters unless they have some really great user facing features that we’re expecting to see on June 10th at their annual developers conference. What that looks like, we have no idea, but that’s part of it. And I know Sir, right, you have some thoughts on this as well. Look an Apple is one of these stocks has become like a treasury bill of the technology world, right? It’s, it’s come down, It’s down 7% for the year, but it’s one amount of cash there. People are safe in it right now. That doesn’t say anything about the growth of Apple. I mean, you haven’t really seen earnings growth or revenue growth, but it’s going to be a question of what. And everybody’s talked about it. Why is it lagged behind meta? Why is it lagged behind Amazon and Microsoft? Because they haven’t really said what are we going to use AI for, right? So the marketing has come out, but let’s see what the execution’s going to be.