Nvidia's boom is the ultimate multiplayer game

Plus: Saudi Aramco, private jets and more. Bloomberg This is Bloomberg Opinion Today, a high-end AI processor of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - [Nvidia]( is popping off. - [Saudi Aramco]( is in denial. - [Private jets]( are not the same as pets. - [WeWork]( isn’t working anymore. This Is What $1 Trillion Looks Like: Nvidia CEO Jen-Hsun Huang Source: Engadget Before last week, if you were to ask a random person on the street what Nvidia was, maybe they’d tell you it was [a lip balm]( or one of those constipation relief ads you see on cable TV: “If you have joint pain while using Nvidia, make sure you are not taking more than the recommended dosage. If you experience symptoms of fluid loss and dehydration while taking Nvidia, consult with your doctor immediately. They can help determine the right treatment …” Or maybe, if the person was into [Counter-Strike or StarCraft]( in high school, they’d tell you that Nvidia’s GPU (graphics processing unit) has been the lifeblood of the gaming industry since the early 2000s, all the way back when [LAN parties]( were big. For the uninitiated, LAN stands for “local area network,” and back in the early aughts, “[legions of PC brethren](” would gather for days on end — monitors and mattresses in hand — to play multiplayer video games together like one big, happy, smelly family: DreamHack 2000 Source: @[modernnotoriety]( on Instagram Nvidia CEO Jen-Hsun Huang made a very wise bet on these gamers 30 years ago when he founded his chip-making empire. “[Huang has a knack for riding tech trends]( — selling graphics chips that powered everything from the video game boom to the rise of cryptocurrency,” Ryan Vlastelica and Ian King write for Bloomberg Technology. And now the [tattooed CEO]( is riding the latest trend — artificial intelligence — all the way to $1 trillion, joining the ranks of just four other American companies with valuations that high: Nvidia has “become the market’s [ultimate story stock]( — that rare bird that’s capable of riding a good yarn to retina-burning valuations even amid tight monetary policy and a potentially looming recession,” Jonathan Levin writes. At the end of last week, Nvidia’s … - sales figures came in 53% higher than analysts had expected. - market value jumped $207 billion in two days. - first-day pop was the third-largest gain in US history. While [some]( may call Huang’s buzzworthy bet on AI half-baked, Jonathan points out that the company doesn’t have all its chips in one basket. From carmakers to crypto, many industries already rely on Nvidia to power their technology. Its AI chips, which Tim Culpan says “differ from standard processors by inhaling huge amounts of data in a single gulp,” will likely further that dependence. Tim also notes that [makers of clunky, old memory chips]( will stand to gain as a result: “For every high-end AI processor bought, as much as 1 Terabyte of DRAM may be installed — that’s 30-times more than a high-end laptop,” he writes. In order to make semiconductors, manufacturers need to gather a ton of information — enough to fill a 170-year-long YouTube video. “It was only a matter of time before [artificial intelligence was deployed]( to try to more efficiently design artificial intelligence chips,” Tim writes. In other words: Nvidia is using AI to create AI chips. Things are getting meta, but perhaps not in the way Mark Zuckerberg [predicted](. “The AI phenomenon has administered what now looks like [a historic shock to markets]( that even rivals the ructions when the pandemic hit three years ago,” Isabelle Lee writes, adding that “ChatGPT has changed perceptions as radically — albeit thankfully in a more positive way — as the coronavirus did.” But not everyone is in a celebratory mood. Cathie Wood, in what might be the worst market call of the year, decided to yank her Nvidia shares in January. Less than five months later, the ARK CEO is awkwardly defending herself on [TV]( and [Twitter](, insisting that Nvidia is “priced ahead of the curve.” Shuli Ren argues [Wood would be better off keeping her mouth shut](. She made a bet on Nvidia all the way back in 2014, and walking out on her investment right before its euphoric boom is embarrassing, to say the least. “Wood’s flagship ARK Innovation ETF has missed out on most of Nvidia’s $600 billion rally this year,” Shuli writes. I’d say Wood has a chip on her shoulder — but alas, she doesn’t even have that. Bonus AI Reading: “The paradox of AI is that while it can write humanlike essays, [machines can still barely walk or pick up a cup](. Why?” Parmy Olson asks. This Is What $2 Trillion Looks Like: Uhhh. Waiiit, what?? How can it be that [Saudi Aramco, with a valuation just north of $2 trillion](, has such appalling liquidity? It seems as though most of the buyers and sellers of the world’s third-largest publicly traded company “are involved in what looks like merry-go-rounds,” Javier Blas observes, pointing to “Middle East investors, often controlled by regional governments or royals” that “trade with each other, back and forth,” with nary an institutional investor or short seller in sight. To put that into context: On any given day, a paltry $51 million worth of Saudi Aramco stock changes hands, compared to $2 billion for Exxon, $7.5 billion for Microsoft and $11.2 billion for Apple. Ever since the oil behemoth’s IPO four years ago, a lot of investors have simply held onto their shares — and 98% of the company is still under the grip of the Saudi government. Another [stock offering]( may soon be on the table, but given the $2 trillion valuation, that won’t be enough to lure foreign investors — many of whom skipped the 2019 IPO — to the table. “Aramco trades at a price-to-earnings ratio of 13.5 times, nearly double that of Exxon,” which Javier says would be “appropriate for shoot-for-the-moon tech stocks, not an old-fashioned oil company.” And that’s not even addressing the energy elephant in the room. Time and time again, David Fickling says, the world’s largest oil producer has exhibited signs that it’s “[underestimating the way that an accelerating energy transition]( and short-term economic weakness are squeezing demand for its product.” A national oil company that is in denial about the inevitable decline of oil isn’t an investment that suits in London, Hong Kong or New York are looking to make. Telltale Charts “Jets or Pets?” sounds like a card game that someone should invent, as long as they give Lara Williams the royalties. Last week, the CEO of private aircraft operator Luxaviation defended his industry’s environmental record with [a doozy of a statement](, saying “one of his company’s customers produced the same amount of CO2 flying privately as three dogs did in a year.” But the thing is, “[private aviation serves a handful of very wealthy people](, while pets bring people of all backgrounds joy and companionship,” Lara writes, noting that “private jets are 5-to-14 times more polluting per passenger than commercial planes, and 50 times more polluting than trains.” The choice is obvious: Pets > Jets. While you weren’t paying attention, [WeWork managed to fall even farther from grace]( by failing to break even. Lionel Laurent says “its share price has fallen to levels that could see it delisted.” Occupancy levels of the co-working space are below their target and investors are finally realizing that no amount of “fun” after-work cocktails can lessen the pain of a long commute. Crash Course “In these early utopian moments of digital media, we really thought we were going to destroy this sclerotic corrupt old media and build something new and better ... We got half of that done." Ben Smith Former editor in chief of BuzzFeed News In the latest episode of [Crash Course](, Tim O’Brien digs into [the downfall of journalism juggernauts]( Vice and BuzzFeed with Semafor's editor in chief. Further Reading [Turkey’s Erdogan]( can’t defy economic reality forever. — Bloomberg’s editorial board Florida is at the forefront of the battle to define [Corporate America’s values](. — Treva B. Lindsey The key to [lower food prices]( is simple: Stop punishing undocumented immigrants. — Amanda Little Multiple trials are underway to discover a workable [breast cancer vaccine](. — Lisa Jarvis Call [Gen Z all the names]( you want, but they have a point about setting boundaries. — Erin Lowry [McCarthy’s reputation]( should be a lot better after this debt-limit deal. — Jonathan Bernstein Inflation hurts our [spending power]( — and no amount of sugar-coated data can change that. — Allison Schrager ICYMI [Iowa apartment collapse](. [Elizabeth Holmes]( has a new home: jail. A [giant pile of logs]( is causing trouble in Canada. Kickers An [unconscious woman]( won cheese-rolling. (h/t Andrea Felsted) The [beluga whale/Russian spy]( is in Sweden. We’ve reached peak [duuuuupe](. [A pageant husband]( is too loyal. Tom Wambsgans?? More like Tom Wambshands. Source: @[evanrosskatz]( on Instagram Notes: Please send cheese wheels and feedback to Jessica Karl at jkarl9@bloomberg.net. 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