25 February 2024 Nvidia's Stock is Surging

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Nvidia's stock is surging​

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Hi Reader 👋🏽,

“World War II was decided by steel and aluminium, and followed shortly thereafter by the Cold War, which was defined by atomic weapons. The rivalry between the United States and China may well be determined by computing power.” - Chris Miller

The Story:

Recently called the most important stock on planet earth, Nvidia announced a 265% increase in revenues in the last quarter of 2023. The company is now the third most valuable tech company in the world.

What you need to know for your interviews:

Investors buy Nvidia stock because they believe in the future of AI. The company became known for building the chips ('GPUs') that render the graphics for video games. It turned out that these GPUs could also help with AI. Today, Nvidia chips are behind most advanced AI systems (including ChatGPT).

Nvidia is a key player in the battle for computing dominance. It is not just about market share; given that semiconductor chips power everything from cars to businesses to defence capabilities, the companies who succeed are crucial in the war for global dominance.

One particular worry is the vulnerability of the supply chain. Today, 92% of the most sophisticated chips are manufactured in Taiwan. When semiconductor shortages hit during the pandemic, companies lost billions in sales. What happens when tensions between China and the US escalate?

What does this mean for law firms?

America’s desire for technological dominance has seen it introduce laws to limit Chinese competition. If you’re a semiconductor company, you have to be careful not to violate US legislation.

This includes the Entity List, preventing the export of certain semiconductor-related technology to Chinese companies, and limiting access to companies deemed to be a risk to US national security. Meanwhile, the Committee on Foreign Investment in the United States (CFIUS) limit particular acquisitions of US semiconductor companies.

Several law firms have formed specialist groups to advise on challenges for the semiconductor industry, including Latham & Watkins, Covington & Burling, and Ropes & Gray.

Cooley has a particularly long standing relationship with Nvidia; the company helped to incorporate Nvidia in 1993, take the company public, and serves as its general legal counsel.