Tech Brew Ride Home - Thu. 05/23 – Nvidia: Still Killing It

Episode Date: May 23, 2024

Nvidia’s earnings are still historic, but what could upset their apple cart? A few things, actually. I think we know the truth or at least the timeline of JohanssonGate. Big new media deal for OpenAI. Likes are going private on X. And would you clone your voice to answer the phone on your behalf? Sponsors: Vanta.com/ride Links: Nvidia shares pass $1,000 for first time on AI-driven sales surge (CNBC) Nvidia’s Business Is Booming. Here’s What Could Slow It Down. (WSJ) OpenAI didn’t copy Scarlett Johansson’s voice for ChatGPT, records show (Washington Post) OpenAI, WSJ Owner News Corp Strike Content Deal Valued at Over $250 Million (WSJ) Crypto Lobby Wins: House Passes FIT21 as Democrats Deride Historic Regulatory Framework (Decrypt) Elon Musk Wants to Make X's Likes Private to Hide Your Favorite 'Edgy' Content (Gizmodo) Truecaller and Microsoft will let users make an AI voice to answer calls (The Verge) The story about my wife's theater project (NYTimes) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Thursday, May 23rd, 2024. I'm Brian McCullough today. InVIDIA's earnings are still historic, but what could upset their Apple cart? A few things, actually. I think we know the truth, or at least the timeline of the Johansson Gate. Big new media deal for OpenAI, likes are going private on X, and would you clone your voice to answer the phone on your behalf?

Here's what you missed today in the world of tech. InVIDIA reported Q1 revenue numbers yesterday. They were good. How good? Well, Q1 revenue was up 262% year-on-year to $26.04 billion versus the $24.65 billion, which was estimated. So roughly a $2 billion beat on your estimates. Again, let me give you those numbers. 262% year-on-year beating even those robust estimates, and the Nvidia is now forecasting Q2 revenue above even those estimates. Oh, and it is splitting its stock 10 for 1. Quoting CNBC, NVIDIA's quarterly earnings report has become a way for investors to gauge the strength of the AI boom that has transfixed markets in recent months. Its strong results on Wednesday suggest that demand for the AI chips Nvidia makes remains robust, and CEO Jensen Huang said the company would see revenue from its next generation AI chip called Blackwell later this year.

NVIDIA said its data center category rose 427% from the year ago quarter to $22.6 billion in revenue. NVIDIA finance chief Colette Kress said in a statement that it was due to shipments of the company's Hopper graphics processors, which include the company's H-100 GPU. A big highlight this quarter was META's announcement of Lama 3, their latest large language model, which used 24,000 H-100 GPUs, Chris said on a call with analysts. She added that large cloud providers make up about, quote, mid-40% of Nvidia's data center revenue, end quote. So once again, if it wasn't clear, they are still historically, epically killing it. The definition of killing it, but the Wall Street Journal took this opportunity to look at what, if anything, could slow or derail this runaway train. Quote, rivals and key customers are looking to produce chips that can close the gap with Nvidia's products. Meanwhile, the AI market, which has proven tricky for some startups, is shifting in ways that could diminish the popularity of NVIDIA's chips.

Despite the power and promise of AI, startups are struggling to come up with a business model that can recoup the massive investment in hardware the technology requires. Sequoia Capital estimated in March that the industry put $50 billion into NVIDIA's chips to train large language models, but generative AI startups had only made $3 billion in revenue. Some AI startups that built products using Nvidia's AI chips have run into turmoil, including inflection AI and Nvidia-backed company that had its co-founder and other employees decamp for Microsoft in March. The chief executive of Stability AI, which built the popular image generation AI tool, stable diffusion, left abruptly in March as well. AI companies big and small also are increasingly looking for ways to build and deploy smaller models that can be effective for specific tasks, but don't require as much of the computational firepower that depends on

NVIDIA's chips. Depending on how they play out, those factors could help take some of the gusto out of a year-long bonanza for NVIDIA, whose sales tripled in the latest quarter and are projected to double in the second quarter. Invita's chip-making competitors are increasing their game as well, releasing their own AI chips that they have claimed are better, at least at some AI computing tasks. They are also aiming to displace Nvidia's dominance in software used to access its GPUs, responding to demand from customers who want alternatives. NVIDIA's market share in AI chips is estimated at above 80%. Big tech companies like Amazon, Google, meta-platforms, and Microsoft are opening another front against NVIDIA by designing their own chips and having them made by contract manufacturers.

Industry analysis from Tech Insights estimated this week that Google became the third largest designer of chips for data centers in 2023 after NVIDIA and Intel. Broadcom CEO Hock-Tan said in an internal address this year, that his company's custom chips division, which mostly helped Google make AI chips, was bringing in over $1 billion in operating profit a quarter, underlying how much money Google is spending on the effort. Hans Mosesman, an analyst at Rosenblatt Securities, said in a note that NVIDIA was expected to lose market share in the percentage of the world's AI chips that it makes because of the competitive pressure. But he said it was likely to maintain and even increase its overall share of the AI computing landscape because of moves it was making to grow its presence

in other areas of computing and in software, end quote. Well, the Johansson Gate continues apace, but maybe we have the answer, and maybe OpenAI didn't do anything wrong. It's just gotten muddled. The Washington Post has done the shoe leather of looking at documents and reaching out to sources, and they think they have the timeline down. Open AI did not use Scarlett Johansson's voice for ChatGPT's Sky Voice, and indeed hired another actress months before Sam Altman even contacted Johansson. Quote, an agent who spoke on the condition of anonymity to assure the safety of her client, said the actress confirmed that neither Johansson nor the movie her were ever mentioned by

Open AI when she was hired. The actress's natural voice sounds identical to the AI-generated sky voice based on brief recordings of her initial voice test reviewed by the post, the agent said the name Sky was chosen to signal a cool, airy, and pleasant sound. Joanne Zhang, who leads AI-model behavior for OpenAI, said that the company's selected actors who were eager to work on an AI product. She played the actors a sample AI version of their voice to demonstrate how realistic the technology could sound. Zhang said she also, quote, gave them an out if they were uncomfortable with the surreal job of being a voice for ChatGPT. Long before the voice auditions, Zhang began developing the way

chat GPT would interact with users. She worked closely with a film director hired by OpenAI to help develop the technology's personality. Zhang said she, quote, kept a tight tent around the AI Voices Project, making Chief Technology Officer Miramoradi the sole decision maker to preserve the artistic choices of the director and the casting office. Altman was on his world tour during much of the casting process and not intimately involved, she said. To Jang, who spent countless hours listening to the actress and keeps in touch with the human actors behind the voices, Sky sounds nothing like Johansen, although the two share a breathiness and huskiness. In a statement from the Sky actress provided by her agent, she wrote that at times

the backlash quote feels personal being that it's just my natural voice and I've never been compared to her by the people who do know me closely. Mitch Glazer, the chief executive of the Recording Industry Association of America, said that Johansen may have a strong case against Open AI if she brings forth a lawsuit. He compared Johansson's case to one brought by the singer Bet Midler against the Ford Motor Company in the 1980s. Ford asked Midler to use her voice in ads. After she declined, Ford hired an impersonator. A U.S. Appellate Court ruled in Midler's favor, indicating her voice was protected against unauthorized use. But Mark Humphrey, a partner and intellectual property lawyer at Mitchell Silbergen Nupp, said any potential jury probably would have

to assess whether Sky's voice is identifiable as Johansson. Several factors. go against Open AI, he said, namely Altman's tweet and his outreach to Johansen in September and May. It just begs the question. It's like, if you use a different person, there was no intent for it to sound like Scarlett Johansson. Why are you reaching out to her two days before, he said. That would have to be explained, end quote. 10 million here, 10 million there. Pretty soon you're talking about real money, right? News Corp and OpenAI have announced a multi-year agreement to bring News Corp's news content to OpenAI, sources say the deal could be worth $250 million over five years, quoting the journal.

OpenAI would use content from News Corp's consumer-facing news publications, including archives, to answer users' queries and train its technology. Terms of content licensing agreements between publishers and OpenAI aren't public, but the News Corp deal is among the biggest, if not the biggest, reached to date. The pact acknowledges that there is a premium for premium journalism, News Corp Chief Executive Officer Robert Thompson said in a memo to employees Wednesday, The Digital Age has been characterized by the dominance of distributors, often at the expense of creators, and many media companies have been swept away by a remorseless technological tide.

The onus is now on us to make the most of this providential opportunity, end quote. News Corp's A shares were up 7.1% in After Hours trading on Wednesday. News Corp joins a growing list of publishers that have reached commercial partnerships with OpenAI, including Politico and Business Insider's parent Axel Springer. The Associated Press, LeMonde, the Financial Times, and IAC's Dot Dash Meredith, home of such publications as people and better homes and gardens, have signed deals as well. Other publishers, including the New York Times, have opted to battle OpenAI and its backer Microsoft in court, saying their content was used without permission to train artificial intelligence tools and populate answers for users.

OpenAI has said the lawsuit is without merit. Among the other publishing deals, OpenAI is on Axel Springer's three-year pact, which includes use of its content for both training and display, is worth at least $25 to $30 million over three years, according to people familiar with the deals. The F.T., whose deal also includes both display and training, is worth $5 to $10 million per year, according to a person familiar with the matter, end quote. Again, at the margins of the news and publishing business, as it exists today, that's real meaningful revenue. and the degree to which some AI companies are clearly willing to pay up gives credence to the theory that high-quality data and maybe especially timely data will be crucial to allowing various AI models to differentiate themselves.

Looks like a lot of lobbying by the crypto industry is starting to pay off. The U.S. House of Representatives has passed the Financial Innovation and Technology Act for the 21st century, which would create a regulatory framework for digital assets. sets, quoting to Crypt. The bill dubbed FIT 21 was approved by the House of Representatives with a 279 to 136 vote, with 208 Republican members of the House voting in favor of the bill. 71 Democrats voted in favor of FIT 21 as well. All but three of 217 House Republican members voted in favor of FIT 21, while about a third of Democrats supported the measure two. The bipartisan push behind FIT 21 encapsulates shifting attitudes towards crypto on Capitol Hill. Just last week, a measure

rolling back crypto custody rules for banks from the U.S. Securities and Exchange Commission passed both the House and Senate, receiving support from notable lawmakers like Senate Majority Leader Chuck Schumer. The bill passed by the House on Wednesday creates a federal framework for the regulation of digital assets, establishing jurisdiction between the Commodities Futures Trading Commission, CFTC, and the SEC, giving issuers the ability to self-certify assets as digital commodities, among other initiatives. The bill was skewered Wednesday by SEC Chair Gary Gensler. Among those that vocalized discontent for the bill was also President Joe Biden, who called out a lack of sufficient protections for investors in written remarks.

Still, Biden in his Wednesday letter, called for a, quote, comprehensive and balanced regulatory framework for digital asset, suggesting that the status quo is currently lacking. Cortailing the SEC's regulatory remit, FIT 21, gives the CFTC exclusive regulatory authority authority over digital asset commodities. Under the bill, criteria is provided for determining that status based on a project's level of decentralization, looking at factors such as how much of a token supply a party owns, or a blockchain's susceptibility to influence from a single party. Clarifying authority between the CFTC and SEC has been a long held hope within the crypto industry, as advocates have said existing rules are unclear. And FIT 21 addresses several areas within crypto,

including the treatment of trading platforms, decentralized finance, and how developers can raise funds for projects, end quote. X director of engineering, Halfi Wang, says, quote, we are making likes private on X in an update happening, quote, soon, as, quote, public likes are incentivizing the wrong behavior. Quoting Gizmodo,

X premium users have been able to hide the posts they've liked for months now, but the future may soon become the default for everyone. A director of engineering at X said the platform is making likes private in a Tuesday post. Yeah, we're making likes private, Wang said in a tweet, public likes are incentivizing the wrong behavior. For example, many people feel discouraged from liking content that may be edgy in fear of retaliation from trolls or to protect their public image, end quote. Wang noted that soon, quote, you'll be able to like without worrying who might see it. Notably, Elon Musk liked this tweet, as revealed by his public likes. Currently,

most users on X have their likes publicly displayed on their profiles, which shows all users the posts they're engaging with. X started offering paying users an option to hide their likes last September, but Wang's tweet suggests the feature may be expanding broadly. Twitter's public likes feature has historically revealed the edgy content celebrities and public figures are enjoying at any given moment. It's the feature everyone forgets about, but always comes back to bite them. Senator Ted Cruz's Twitter account once liked a pornographic video, but then he blamed a staffer and said it's not going to happen again. Samuel L. Jackson was once caught liking hardcore pornography, but then unliked all of them once his fans warned him they were public. And of course, Musk's own

public likes have placed him in hot water before as well. This change falls in line with Musk's broader vision for X to conceal likes and reposts more broadly. Previously, Musk revealed a long-term plan to hide likes and repost counts on the timeline, creating a cleaner experience that only shows the view count. He went on to explain that you'll only be able to see likes and repost when you click on the actual post. This change has hasn't happened yet, but must says it is, quote, definitely happening, end quote. Finally today, you don't have to be a podcaster to dream of one day cloning your voice for use for various purposes. Truecaller has partnered with Microsoft's Azure AI speech to let its AI

users create an AI version of their voice to answer calls based on a recorded clip. Quoting the Verge, Truecaller is an app that identifies and blocks spam calls that some people prefer over their phone's default system. Truecaller's AI assistant screens, incoming calls, and lets users know why they are calling. Customers can see the reason for the call and can choose how to respond, either by picking up the phone or having the assistant answer for them. The assistant, only available in select countries, was first introduced on the TrueColor app in 2022. Users have always been able to choose from a preset number of voices to represent them, and the company says letting users record their own voice is a step in personalizing the service even more.

AI speech showcased during the build conference added a personal voice feature that lets people record and replicate voices. Microsoft says in a blog post, however, that personal voice is available on a limited basis and only for specific use cases like voice assistants. Microsoft says it automatically adds watermarks to voices generated by Azure's AI speech personal voice, and it released a code of conduct requiring users to get the full consent of people being recorded and prohibit impersonation, end quote. Last link in the show notes today is to a New York Times article about my wife. Well, not exactly, though she is quoted in the piece.

Look for Lisa Rosemaryk. The story is about the Palace Theater, a huge Broadway theater that was built back in 1913. This is an architecture project that my wife has been working on for the last seven years. A developer hoisted the 14 million pound theater, the theater itself 30 feet up into the air, to make room for retail below and replacing the hotel in the air rights above. The developer also paid for an $80 million renovation of the theater because it was an interior landmark, and now the theater is reopening. Again, my wife did this.

It was her dream project. It's absolutely gorgeous. When all of our dumb podcasts and tweets and apps are long forgotten, this theater will still be delighting people. Look at the pictures. Everything you see. She had a hand in from the chandelier to the plaster to the color of the seats to the bathrooms. I hope for all of you, the absolute blessing of having a life partner that is as talented as mine is. Congrats, Lisa. Talk to you tomorrow.