OpenAI COO Says Buy NVDA

If you’re looking to buy Nvidia, don’t just research Nvidia.

Research the whole industry.

• Check its competitors like AMD and Qualcomm.
• See what its supplier TSMC is saying.
• Pay close attention to its customers like Meta Platforms, Microsoft, and Alphabet.

Of course, Nvidia’s unique financials, guidance, and management commentary is important.

But you’ll likely find plenty more relevant information to your buy/sell decision from external factors – like competitors, suppliers, and customers.

I mention this because the Chief Operating Officer of OpenAI just gave a rare interview on CNBC. His name is Brad Lightcap.

What he said spiked Nvidia’s stock price 3% yesterday and the stock is continuing to move higher another 3-4% today as I write this.

To give you a sense of the significance here, Nvidia’s market cap gained $223 billion in these last two trading days, or roughly the size of McDonald's.

Here’s what he said:

Lightcap: “We think we’re going to end up needing a lot more [compute power].”

Interviewer: “Ultimately, it’s like a boundless need for compute?”

Lightcap: “Well certainly we’re optimistic.”

Interviewer: “Even with the new models, even though they’re efficient, they still consume even more [compute power]?”

Lightcap: “You can throw arbitrary amounts of compute at these models and they just get smarter. And they can think harder, they can solve harder problems, and we’re just at the beginning of that paradigm.”

Interviewer: “$6.6 billion [in recent fundraising] comes in, where do you use it?

Lightcap: “It’s going to be primarily compute. That’s going to be the biggest input to these models working.”

If you recall, I wrote about the “three pillars” of AI two weeks ago.

Those pillars are compute, algorithms, and data.

Compute refers to the hardware and infrastructure created by companies like Nvidia.

Algorithms are the mathematical models or methods that AI systems use to analyze data. OpenAI fits into this bucket.

The third pillar is data. AI systems rely on vast amounts of data to learn patterns, make predictions, and continuously improve their performance.

OpenAI’s COO just reiterated that the demand for compute (supplied primarily by Nvidia) is not stopping anytime soon.

In fact, they’ll likely spend the majority of their $6.6 billion in recent fundraising on AI chips.

Add Lightcap’s comments to the list of other tech execs saying the same thing:

Microsoft’s CFO announced the company is going to spend more money next year versus this year to build out its AI capabilities. (They spent $19 billion just last quarter.)

Amazon’s CFO is projecting higher spending on AI development in the second half of the year versus the first half. (Total expenditures was $30.5 billion in the first half.)

Alphabet CEO Sundar Pichai recently said he’d rather over-invest in AI versus under-invest and risk falling behind on this generational technology.

And Meta’s CFO recently increased its projected AI spend by billions of dollars.

If you’re researching Nvidia and don’t look externally for insights, you likely would not know these quotes exist.

In my opinion, however, these quotes are the best reason to own the stock.

Remember this next time you’re evaluating any stock to buy/sell.

Of course, you can also just stick with us here at Altucher Confidential where we do the work for you.