Nvidia Is Losing Top Talent to $21B AI Chip Startup: Why Investors Are Betting on the 'Kids in Chips'

Alibaba's U.S.-listed shares rose 2% in overnight trading after unveiling China's most powerful AI chip, the Zhenwu V900, developed by its T-Head unit. The chip offers three times the performance of its predecessor and is set for mass production in early 2027. Alibaba is expanding its data-center capacity and investing over $53 billion in AI capabilities. Nvidia's stock saw a marginal increase. Alibaba's stock has been volatile but higher over the past two months, down 20.3% year-to-date.

Amazon's AWS division plans to purchase over 3 million Nvidia GPUs by 2029, including 2 million Blackwell Ultra, Rubin, and Rubin Ultra GPUs by 2026. The agreement was announced alongside Nvidia's quarterly earnings report. AWS's Q2 revenue rose 37% YoY to $42.2B, with a contracted backlog of $496B. Amazon is also investing in AI infrastructure and custom chips.

Amazon's AWS division plans to deploy over 3 million Nvidia GPUs by 2029, with 2 million additional units scheduled for 2027-2028. The deal includes GPUs based on Nvidia's Blackwell Ultra, Rubin, and Rubin Ultra architectures. AWS's Q2 revenue grew 37% YoY to $42.2 billion, with a contract backlog of $496 billion. Amazon CEO Andy Jassy noted supply constraints but expects strong financial returns from AI investments.

Nvidia's supply commitments surged to $279B, driven by memory needs, impacting its gross margins (75% in Q2, expected to drop to 71%-72%). Micron, a key memory supplier, reported strong fiscal Q3 results ($41.46B revenue, $28.24B net income) and high margins (83%-87%). Micron's HBM4 memory is critical for Nvidia's AI chips, creating a supply bottleneck. Micron's CEO noted HBM's high wafer consumption limits conventional DRAM supply, affecting industries like smartphones.

NVIDIA CEO Jensen Huang highlighted memory and silicon photonics as AI bottlenecks, with Micron, Coherent, and Tower Semiconductor positioned to benefit. Micron leads in high-bandwidth memory, Coherent supplies photonics components, and Tower Semiconductor manufactures wafers. NVIDIA expects 70% revenue growth, and analysts note supply constraints and pricing power in these sectors.

Iambic Therapeutics, backed by Nvidia and Qatar's sovereign wealth fund, filed for a US IPO. The biotech company develops drugs using AI, with its lead candidate in early-stage trials for solid tumors. Iambic has raised $461.8M and plans to list on Nasdaq as 'IAM'.