A closer look

Observer Morning Report · November 9

Nvidia had two pieces of big news this weekend unrelated to chips. First, on November 8, Nvidia's board of directors announced that a committee composed of independent directors has launched an independent investigation and hired external independent legal counsel regarding reports that Jensen Huang may have become a target of foreign intelligence activities; the board stated there is currently no reason to believe that US national security or company trade secrets have been compromised, and they maintain confidence in Jensen Huang and the management team. On the same day, Jensen Huang sent a letter to employees admitting to marital infidelity and apologizing to his family, colleagues, and shareholders, stating he will fully cooperate with the investigation and continue to lead the company; Trump later said he is a "good guy". The conclusions of the investigation and the completion time have not been announced. Second, according to US media reports, Oakland police are investigating a theft of Nvidia goods valued at 11.4 million US dollars: a truck loaded with AI chips and computer hardware departed from Oakland on August 29 bound for Fort Worth, Texas, and lost contact en route; a report was filed on September 13, and police have not yet caught the suspects; experts say the selling price of this batch of chips outside the US is nearly double that in the US, and it cannot be ruled out that they have been shipped abroad.

The most important change over the weekend is that data center regulation has shifted from "market panic" to a specific agenda. According to Reuters, Democratic lawmakers and congressional aides said that after taking over Congress next January, they will promote a series of bills targeting AI and data centers, focusing on preventing residents from bearing the cost of new electricity bills from data centers, requiring advanced models to undergo independent security assessments, clarifying corporate responsibility when AI products cause harm, and planning to use committee authority to require tech executives to testify. The Associated Press added that the incoming governors of Texas and Ohio have both proposed restrictions or approval conditions for data center projects. It needs to be emphasized that there is currently no unified national ban on data center construction, federal bills still need to go through the legislative process, and Trump previously opposed mandatory AI regulation. The more realistic short-term risks are state-level permits and congressional hearings, rather than federal legislation, but "who pays the electricity bill" has already become a specific political issue.

The reaction of companies has also been consistent: absorbing costs themselves before regulation hits. CoreWeave CEO Interrato wrote to Texas Governor-elect Inohosa, stating the company supports involving communities in project decision-making, protecting local water and power resources, and not passing new infrastructure costs on to households; the company will bear the costs for substations, transmission upgrades, and construction needed for new facilities to connect to the grid, new capacity will use closed-loop liquid cooling, and they hope to discuss the "responsible completion" of already permitted projects and development standards for future projects with her team. This is in the same direction as OpenAI's promise on Wednesday to bear data center electricity costs itself. Google is also taking over the land for a Crusoe data center project in southeastern Wyoming, with a power supply plan combining fuel cells, grid power, and natural gas turbines, and planning to introduce carbon capture; Crusoe continues to be responsible for another Google campus under construction near Amarillo, Texas.

According to the Financial Times, in late September, Anthropic spent 3.4 billion US dollars to purchase a procurement commitment for 1.7 gigawatt heavy gas generator units from OnePWR Solutions, an equipment supplier in San Antonio, Texas, including the engineering and construction capabilities required for installation, but did not acquire OnePWR the company itself; the report says this is currently the largest single power equipment procurement known for an AI lab, and emphasizes that this does not mean the relevant power capacity is already operational; both parties refused to comment. Putting these points together, my observation is that data center competition is shifting from "competing on compute power" to "competing on social license": whoever can prove they can afford the electricity bills without passing them on to residents will find it easier to get projects.

This sentiment of resistance is not only in the US. According to the Associated Press, civil organizations from 15 European countries took joint action from November 6 to 7, demanding a pause in large-scale data center development until power, water resources, and social environmental impacts are fully assessed; in Amsterdam, protesters entered a Microsoft data center construction site, and police detained approximately 150 to 200 people; there were also demonstrations in Berlin and Warsaw.

On the geopolitical front, Trump said in a CNN phone interview that if the US and Iran can sign a sufficiently strong agreement, the US will likely not need to strike again, but simultaneously stated that the US side has identified potential infrastructure targets, including 38 bridges. The Qatari Prime Minister said mediation is continuing, negotiations have made clear progress, and denied reports that consultations failed. The US military claimed to have hit a merchant ship attempting to break a blockade in the Gulf of Oman, while Iran claimed a tanker hit a mine or caught fire in the Strait of Hormuz. Regarding China and the US, He Lifeng held a video call with Bessent and Greer on the evening of November 6; the Chinese side expressed serious concern over recent US economic and trade restrictive measures against China; the Ministry of Commerce simultaneously responded to US sanctions on two Chinese companies, stating opposition to unilateral sanctions based on the involvement of third parties and reserving the right to take necessary measures; the announced content contained no new tariff adjustments, export control exemptions, or procurement arrangements.

On the data side, October non-farm payrolls added 165,000 people, far higher than the expected 65,000; the unemployment rate dropped from 4.2% to 4.1%; average hourly wages rose 0.4% month-on-month and 3.1% year-on-year; August and September were collectively revised upward by 84,000; new jobs mainly came from professional and business services, healthcare, and transportation and warehousing.

A few last short news items. Musk said Tesla will add a production shift for the Cybertruck to strive to deliver existing orders before the line is dismantled next year, stating that the backlog of orders exceeds the quantity that can be produced before June to July 2027, but did not disclose the scale; Reuters cited Kelley Blue Book data stating this model's 2025 US sales will be around 20,000 vehicles, lower than the nearly 39,000 in 2024. According to Bloomberg's Gurman, the Apple CEO asked the head of software engineering to accelerate the AI roadmap, hoping Siri can become more like an "agent" as early as next year, continuously tracking user goals and advancing tasks. Berkshire repurchased about 9.6 billion US dollars in the third quarter; net profit attributable to shareholders was 22.112 billion US dollars, down about 28% year-on-year; operating profit was 12.705 billion US dollars, down about 5.8% year-on-year; investment income was 9.407 billion US dollars, lower than the 17.311 billion US dollars in the same period last year. Amazon is also assembling a new home robotics team.

This week's nodes: Monday to Wednesday is US quarterly refinancing, Tuesday 21:30 announces October CPI (previous value 3.7% year-on-year), Friday is PPI, Anthropic may start IPO roadshow as early as this week, and November 17 is Nvidia's earnings report.