The Morning Download: A New Signal for Strong AI Demand

Good morning. For anyone interested in gauging artificial intelligence demand in the year ahead, here's a crucial data point:

Taiwan Semiconductor Manufacturing today signaled confidence in demand despite the Iran war, raising its revenue forecast, projecting capex spending on the higher end and downplaying supply-chain disruption risks.

Here's the Journal's Yang Jie and Sherry Qin:

TSMC, a contract chip maker for clients such as Nvidia and Apple, projected that its capital expenditures for the year would hit the higher end of the $52 billion to $56 billion range projected in January. The company said it expected revenue to grow more than 30% this year in dollar terms, from an earlier estimate of around 30%.

“For anyone wondering whether the AI trade still has legs, TSMC just told us that business has never been better,” Josh Gilbert, an analyst at eToro said in a note.

"The chip business is notoriously cyclical," the WSJ's Dan Gallagher noted earlier in his earnings preview, but for now at least the chip maker confirmed that AI infrastructure buildouts are resilient enough to withstand near-term economic or geopolitical shocks.

TSMC executives Thursday also noted that the company doesn’t expect production to be interrupted in the near term by a fuel shortage, as Taiwan has secured enough liquefied natural gas supplies through at least May.

The continued strength of AI demand is manifesting itself in numerous ways across the economy—from layoffs to bizarre corporate pivots (more on both below)—but TSMC's earnings offer perhaps the clearest signal yet that the infrastructure buildout is not over.

Snap plans to cut around 1,000 jobs. In a memo to employees Wednesday, CEO Evan Spiegel said the cuts, roughly 16% of its full-time workforce, were necessary to enable the social-media company to increase efficiency and pursue profitable growth.

Has the era of the mega-layoff arrived? The layoffs follow a wave of major workforce reductions across tech: Block eliminated 40% of its staff, Oracle has shed thousands of employees, and Amazon cut about 30,000 positions in recent months.

The Journal's Chip Cutter sees new factors at play:

The willingness to make the big cuts reflect a fundamental shift in how U.S. companies view their professional talent. Instead of competing for knowledge workers with big pay raises and other perks, as many did for much of the past decade, corporate leaders have come to see large teams as impeding progress, not helping it.

The company behind Silicon Valley’s favorite shoe is now an AI company. Allbirds, once known for its eco-friendly wool sneakers, said Wednesday that it will rebrand NewBird AI, and announced plans to buy high-end servers equipped with AI chips and rent out access to them. The move comes just weeks after Allbirds, once valued at $4 billion, struck a deal to sell off most of its assets for $39 million.

This sounds familiar. Not so long ago, during an earlier frenzy (bitcoin) an electronic cigarette company, a biotech firm and even Kodak refocused around the cryptocurrency. Bonus points for anyone that remembers when Long Island Iced Tea became Long Blockchain.

Of course none of those companies faced competition like the red hot space for AI infrastructure that Allbirds is entering. The company also announced Wednesday that it was raising $50 million for the pivot. Compare that with (now-)rival CoreWeave, which plans to spend $30 billion to $35 billion to build out its operations this year.

Speaking of CoreWeave, the WSJ reports that Jane Street invested $1 billion in the AI cloud provider. The trading firm also inked an $6 billion deal to access CoreWeave’s computing capacity, including Nvidia’s Vera Rubin computing technology, to help run and scale its AI efforts.

AI boom touches late-stage venture-funds. U.S.-based growth and late-stage venture funds raised $23.6 billion this year so far, according to research firm PitchBook. Such funds invest in startups that are typically raising their Series C or later rounds, according to the data provider’s definition.

Behind the figure, which already exceeds annual totals for any of the past dozen years, is a desire to focus on a narrower set of fast-accelerating AI startups with hopes of exiting them relatively quickly, the WSJ’s Yuliya Chernova reports. 

Ford EV chief steps down. Doug Field, lured by Ford Motor from Apple five years ago to bring the automaker into the digital and electric age, is leaving amid a wider reorganization, WSJ reports. Field has been leading a secretive effort to develop a line of affordable, high-tech electric vehicles.

More on the Sam Altman attack. Months before his arrest for allegedly attempting to murder the chief executive of OpenAI, Daniel Moreno-Gama suggested “Luigi’ing some tech CEOs” in an internet chat.

Posing as employees of an established trading firm, the attackers convinced Drift to accept a counterfeit token as collateral. Hidden code embedded in the token allowed them to drain funds while maintaining the appearance of a legitimate transaction.

Here's the Journal on the heist.

Drift and the false representatives of the trading firm met multiple times face-to-face and held working sessions together. The alleged trading firm even deposited over $1 million of capital on Drift’s platform. This would represent a new tactic by the Kim regime, said Nick Carlsen, a former FBI analyst who has investigated North Korea’s cybercrimes for years.

“This is not something North Koreans were seen doing before,” said Carlsen, who now works at TRM. “It’s a new world.”

Iranian leaders have portrayed the current cease-fire as a victory against an overwhelming U.S. and Israeli onslaught. But they now face a towering postwar reconstruction challenge that is putting pressure on them to negotiate for sanctions relief. (WSJ)

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