| Hi from San Francisco. Nvidia Corp. CEO Jensen Huang is finding that his push to expand the customer base for his market-leading AI chips comes at a cost. But first... Three things you need to know today: • Google rebuked the DOJ’s request to sell Chrome
• The NSA director seeks more info when companies have been hacked
• Anthropic’s CEO wants mandatory safety tests for all AI models Jensen Huang has been crisscrossing the globe appearing at as many large events as any single human being can to deliver the same message: The AI age is coming and you need to deploy new computer gear right now. His push to get industries from shipbuilding to drug discovery to embrace the emerging technology is a strategy designed to head off any threats to the incredible rise of his company and the importance of its hardware in the artificial intelligence computing age. Nvidia’s earnings report on Wednesday showed those efforts are still a work in progress — and will come with a cost. Unlike the hardware companies that dominated the dawn of the internet and the surge of smartphones, Nvidia is taking a far more active role in propagating its technology and directing how it will be used. It’s providing chips, computers, super computers, software, networking and, increasingly, AI models that newcomers to the field can easily adopt. That’s an attempt to build insurance that there won’t be a massive collapse after the current explosion in demand as the world’s economy looks for how the new technology will pay off. More narrowly for Nvidia, it’s also an attempt to decrease its dependence on a very small group of companies investing massively in new hardware. That group, including Microsoft Corp., Amazon.com Inc., Alphabet Inc. and Meta Platforms Inc., share another trait: They’re all working hard to develop their own chips, which could alleviate their need to buy components from Nvidia. Huang has been asked multiple times about this potential risk. But he says he’s not worried. The work to encourage more industries to use artificial intelligence will help the big cloud providers, whose computing power is needed to run AI tools, Huang says. And, he adds, as long as Nvidia’s ever-improving technology continues to lead the market, those companies will stay hooked. In the September quarter, Nvidia increased its reliance on the big cloud service providers. As a group, they accounted for 50% of the company’s data center revenue, up from 45% three months earlier. It’s way too early to say that Nvidia’s diversification effort has stalled, because the chipmaker is in a transition period for its product lineup. The big tech companies’ ability to build their own systems — and their huge budgets — naturally make them fast adopters of new gear, at scale. Longer term, though, Nvidia investors want that portion of revenue to shrink almost as much as they want overall sales to go up. Nvidia also cautioned that spending on getting new chips into the hands of customers and helping them set up new infrastructure will eat into its profit margins. The new Blackwell line of AI processors comes in many forms, some designed to fit into smaller, cheaper infrastructure and some in complete systems that are more plug-and-play. Nvidia will be throwing engineering dollars at helping customers get the new kits up and running, Huang said. But, as has become typical for what is now the world’s most valuable company, normal benchmarks don’t apply. Gross margin, or the percentage of profit remaining after deducting the cost of production, shrank to 75% in the quarter and will head down a few more points before rebounding, Nvidia’s CFO said. That’s a high-class problem to have compared to its rivals. Advanced Micro Devices Inc. reported one of its highest gross margins ever in its most recent quarter, but still is 20 percentage points shy of Nvidia’s total. Intel Corp., once the envy of the industry, had a gross margin of 15%.—Ian King US prosecutors charged Gautam Adani with helping drive a bribery scheme, alleging he and others promised to pay over $250 million in bribes to Indian government officials to win solar energy contracts. The charges are a major new headache for Adani, an influential businessman in India, and his conglomerate, which has a wide-ranging presence across the Asian country and beyond. Japanese memory maker Kioxia is fast-tracking its IPO to mid-December at a valuation of $4.8 billion. Snowflake gave a surprisingly strong outlook, suggesting the data software provider is pleasing customers with its new tools for AI. Disney+ announced a slate of new content for Asia that’s heavily reliant on Korean and Japanese originals. Starbucks is considering selling a stake in its Chinese business as one of the options for improving operations there. | 
