Nvidia’s Boom-Bust Cycle

The Guardian reports that OpenAI CEO Sam Altman is reportedly in talks to acquire a chip builder to reduce its reliance on Nvidia.

Critical inputs: Gary Marcus, an AI expert who spoke at the US Senate AI Oversight Subcommittee, reports Sequoia discovered that the AI industry spent $50 billion on Nvidia chips to train AI models last year but only generated $3 billion in revenue.

Impact: The Information declares that Microsoft and OpenAI are working on a massive data center to house an AI-focused $115 billion supercomputer featuring millions of non-Nvidia GPUs.

Anomalies: CNBC reports, "Nvidia is currently valued at more than $2.2 trillion, powered partially by the tech industry's artificial intelligence boom and high demand for its computer chips."

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Egypt faces a severe foreign currency shortage, unprecedentedly high debt levels (public debt currently exceeds 92 percent of gross domestic product (GDP)), and soaring inflation.

Critical inputs: According to Bloomberg, "The International Monetary Fund approved a $5 billion augmentation to its loan program for Egypt, part of a wave of global aid pledged to bolster a stumbling economy.”

Impact: Nearly 30% of Egyptians live in poverty but the IMF and European Union are working to change that with new programs to attract foreign investment.

Anomalies: Emirati sovereign wealth fund, Abu Dhabi Developmental Holding Company (ADQ), is putting $35 billion in investments to develop part of Egypt’s Mediterranean coast.

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Nippon Steel Corp. plans to go ahead with the acquisition of United States Steel Corp (X).

Critical inputs: U.S. Steel releases, "NSC to acquire U.S. Steel for $55.00 per share in an all-cash transaction representing 40% premium, providing certain and immediate value to U.S. Steel shareholders."

Impact: President Biden stated that U.S. Steel should remain domestically owned and Reuters reports, "Donald Trump has promised to block the deal if he is re-elected." 

Anomalies: Following the news, U.S. Steel's stock price (X) climbed above $41 per share, not the massive surge expected by many analysts.

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The Atlantic Council reports, "Policies such as Egypt's expensive subsidy regime, a bloated and degenerating civil service, and what some analysts describe as Sisi's" vanity" mega-projects" make it difficult for foreign investors to invest in Egypt.

Critical inputs: Sisi built a new administrative capital in the desert at an estimated cost of $59 billion during economic retraction.

• Despite the lavish spending by the current regime, Egypt remains "a valued U.S. partner in counterterrorism, anti-trafficking, and regional security operations," according to the Department of State.

• Since 1978, the United States has contributed more than $50 billion in military assistance.

Impact: According to the Library of Congress, "Egypt's natural resources include: petroleum, natural gas, iron ore, phosphates, manganese, limestone, gypsum, talc, asbestos, lead, rare earth elements, and zinc."

• Since 2018, The Government of Egypt has encouraged international oil companies (IOCs) to participate in the oil and gas sector, and more than fifty IOCs are currently operating in Egypt.

• Egypt plays a vital role in international energy markets through the operations of the two Suez Canal transit points and the Suez-Mediterranean (SUMED) pipeline.

• U.S. energy giants like ExxonMobil and Chevron entered Egypt's dynamic upstream sector in 2019 and won additional concessions in early 2020.

Anomalies: Organizations friendly with the IMF and European Union have an opportunity to enter Egypt at a time of economic desperation.

• Former deputy prime minister Ziad Bahaa-Eldin says the massive bailout has saved Egypt "from falling into the abyss."

• The African Reports explains, "Egypt's President Abdel Fattah al-Sisi begins his third term this week buoyed by massive fresh financing, but experts say the road out of the economic crisis will still be long and arduous."

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