👌 Nvidia’s permission chip

Big Tech companies like OpenAI, xAI, Meta, Google, Microsoft, and Amazon are racing each other to spend tens of billions of dollars on massive AI data centers. But no matter how many Nvidia GPUs you acquire through complex partnerships, there is one factor that may limit the industry’s AI dreams: energy.

• A new analysis by the Financial Times found that the tech industry is currently moving forward with plans to build out a staggering 44 gigawatts’ worth of computing infrastructure. The problem is that there’s only about 25 gigawatts of power coming online in the next three years. 

• That 19-gigawatt gap is going to be a problem. It’s no question that one of the most difficult elements of the data center build-out has been how exactly to power them. 

• Even with the full support of the Trump administration, it could be hard for all the tech companies to get the power they want, something that Nvidia CEO Jensen Huang as well as Microsoft CEO Satya Nadella have both noted is the main obstacle to rapid AI expansion.

The energy part of the equation is one of the more politically perilous questions as well. As we saw in Memphis when Elon Musk’s Colossus data center came online, one of the more polarizing elements of the build-out was all those gas turbines and the pollution that came from them.

The Takeaway

A key issue for the government has been a trilemma centered around the AI boom’s power needs, one that’s been the bugbear of George Pollack, the senior US policy analyst at Signum Global Advisors. Essentially, the Trump administration can achieve two of three conflicting goals: (1) preside over the AI boom, (2) boost fossil fuels and stifle renewables, and (3) avoid household angst over energy prices. 

The current course of action — stymie renewables and gas the AI boom — will begin to fall under the rather brutal laws of supply and demand, invariably resulting in higher energy costs for ordinary citizens as the massive utility companies can only produce so much power.

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The US Department of Commerce will give the go-ahead to export the powerful H200 chip produced by Nvidia to China, which has been a core priority for the chip juggernaut.

• This isn’t the first time that’s been teased. When the story dropped midday, the market reacted accordingly: a burst of enthusiasm that led to a sharp increase in Nvidia’s share price, followed by the gradual realization of who, precisely, we’re dealing with here. When Bloomberg initially reported on the potential for H200 sales to China on November 21, the stock’s jolt higher didn’t even last the day.

• After the spike, shares settled down slightly above where they had been prior to the publication of the story, signaling that the market would love this news if there were any actual assurances it would in fact come to pass beyond remarks from “a person with knowledge of the plan,” as Semafor reported.

• Then, just after market close, President Trump indicated that he had indeed informed his counterpart, President Xi Jinping, that he would allow the sale of the H200s to proceed, with 25% of the proceeds going back to the US, sending the stock up after-hours.

H200s are the most advanced chips from the Hopper line, which was Nvidia’s leading offering prior to Blackwell.

If there is anything at the top of Jensen Huang’s Christmas list, it’s allowing Nvidia to sell these chips to China. While it’s generally great to be the company making the most important product in the economy, this side of the business has been one of the more precarious negotiations of Huang’s tenure.

The Takeaway

Shipments of these chips are “reviving a key data-center revenue stream and potentially restoring $10-$15 billion annually,” wrote Bloomberg Intelligence analysts Kunjan Sobhani and Oscar Hernandez Tejada. “The H200 — offering 5-7x faster performance, 50% more memory, and over 2x the average selling price of the H20 — would likely become the highest-end GPU that Chinese buyers can legally procure, reopening a significant high-margin channel.”

The other moral to this story? Never stop complaining. Huang has been whining about Nvidia’s  access to this market for months, and in the end, he got just what he wanted.

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Things Netflix said it would never do, then did

With its announcement that it plans to buy Warner Bros. Discovery’s studio and streaming businesses, Netflix is doing something it repeatedly said it never would: buying an asset it long insisted it could build itself. And it’s not the first time the company has changed its tune.

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Snacks Shots

• 🏈 NFL: The Indianopolis Colts’ Cinderella season came to a rough end on Sunday when breakout quarterback Daniel Jones sustained an injury that on Monday was reported to be a torn Achilles tendon, ending his season. As a result, the Colts’ market-implied* chance of winning the AFC Championship fell from around 11% pregame on Sunday to 1% as of today. 

• 🎬 Oscars: Yesterday saw the announcement of the Golden Globe nominees, and while many films punched their tickets to remain contenders in the Oscar race, “Wicked: For Good” saw its chances melt like a witch underwater after being snubbed for Best Musical or Comedy. The probability of “Wicked: For Good” scoring one of the 10 Oscar Best Picture nomination slots had peaked at a high of 86% the week prior to the film’s release. By Sunday, that had fallen to around 51%, only to drop to just 19% after the announcement of the Golden Globe nominees.  

*Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.