Microsoft, Nvidia Will Fight for AI Profits. Who Will Fight for AI Safety?

Only Quora CEO Adam D’Angelo remains from the old OpenAI board that fired Altman on Friday, reiterating the importance of its mission of putting safety over generating profit. Pushing profits into second place is no easy feat. Particularly as Nvidia CEO Jensen Huang said Tuesday that generative AI was the largest market expansion in software and hardware in several decades, on the company’s earnings call.

It was a revolt by more than 700 OpenAI employees threatening to quit and join the company’s biggest investor
Microsoft
that helped secure Altman’s reinstatement.

To be clear, the returning CEO has spoken publicly about the need to ensure AI safety. But the tumultuous nature of the events of recent days, and the fog surrounding his ousting, are perhaps the most alarming aspects, given what’s at stake.

For those worried about the potential threat of AI being mishandled, the saga is unlikely to inspire confidence. It also makes Altman seem untouchable.

To mitigate the so-called ‘key man risk,’ OpenAI has filled its board with more key men. Enter the former U.S. Treasury Secretary Larry Summers, and former Salesforce co-CEO Bret Taylor. It’s not hard to imagine Microsoft CEO Satya Nadella joining in the future.

Ultimately the frantic five-day furor highlights, among other things, that Silicon Valley can’t be relied on to regulate AI. It will fall to Congress, which is still grappling with social media oversight. Lawmakers have plenty to do and fast.

—Callum Keown

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Demand for AI Chips Drives Surging Revenue, Outlook

Nvidia
posted record revenue in its latest quarter and provided a better-than-expected revenue forecast for the January quarter, suggesting investments in artificial intelligence continue to be strong. But it wasn’t enough to satisfy the even loftier expectations of some analysts after an AI-fueled boom.

• October-quarter revenue more than tripled to $18.1 billion. Adjusted profit of $4.02 a share also beat expectations. For the current quarter, Nvidia forecast revenue of $20 billion at the midpoint of a range, above expectations for $18 billion. Some analysts had estimated $21 billion or more.

• Nvidia’s data-center business revenue surged 279% from last year to a record $14.5 billion. Personal-computing revenue rose 81% to $2.86 billion after an industry slowdown. But the company faces curbs on chip exports to China, which could slow revenue.

• The company is creating a new line of chips for the Chinese market that would fall under the performance thresholds that would trigger government oversight, The Wall Street Journal reported. Chief Financial Officer Colette Kress said a sales drop in China could be offset by strong growth elsewhere.

• Nvidia’s processors support the parallel computations needed to train AI models and serve customers. Nvidia’s high-end H100 became the technology industry’s most sought-after resource in the excitement over generative AI.

What’s Next: Nvidia this month announced its next major AI chip, named the H200 Tensor Core GPU and scheduled for release in second-quarter 2024. The chip maker is accelerating its product cycle to one year, down from two, with additional high-end AI products coming in 2024 and 2025.

—Tae Kim and Janet H. Cho

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Binance, Former CEO Plead Guilty to Anti-Money-Laundering Violations

Crypto exchange Binance pleaded guilty to anti-money-laundering violations, as did its founder and CEO Changpeng Zhao, who also agreed to step down. The exchange’s agreement settles lengthy investigations by the Justice Department, the Treasury Department, and the Commodity Futures Trading Commission, and includes a $4.3 billion fine.

• Zhao, known by the initials CZ, admitted to making mistakes and said he accepted responsibility. He added that Richard Teng, formerly Binance’s head of regional markets, was named the new CEO, and CZ said it was unlikely he’d take another job helming a start-up.

• Binance prioritized “growth over compliance” with U.S. laws, conducting billions of dollars in transactions without getting required information on customers or monitoring the transactions, Attorney General Merrick Garland said. Binance didn’t return a request for comment.

• Officials said people from Iran, Cuba, and Syria—all under U.S. sanctions—were able to access the Binance platform and conduct more than 100,000 transactions, including suspicious transactions involving terrorist groups such as Hamas.

• It was the second case against a major crypto player in a month, after the conviction of former FTX CEO Sam Bankman-Fried on seven counts of fraud. “Using new technology to break the law does not make you a disrupter, it makes you a criminal,” Garland said.

What’s Next: Under the settlement, Binance has to report the suspicious transactions it has failed to report so far and set up an effective anti-money-laundering program. The settlement agreements subject Binance to increased scrutiny for five years through a third-party monitor.

—Liz Moyer

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Federal Reserve Still Sees Risks to Achieving 2% Inflation

Federal Reserve officials gave no indication they were considering rate cuts during their last policy meeting, instead indicating a willingness to keep rates elevated. They noted risks to achieving their 2% inflation target, including resilient consumer spending and other recent economic momentum.

• Fed policy committee members all agreed that monetary policy must remain restrictive for some time until inflation is clearly moving toward 2%. With inflation still above that and the labor market still tight, most worried more about doing too little, the Oct. 30-Nov. 1 meeting minutes show.

• Members noted dangers that included the potential for larger-than-anticipated effects from past rate increases, which are expected to hit the economy with a lag, the effects of labor strikes, slowing global economic growth, and continued weakness in commercial real estate.

• Policy makers agreed the central bank should proceed carefully, and that decisions should be made meeting-by-meeting, based on the totality of incoming information and its implications for the economic outlook. Coming data are expected to help quantify how much inflation is slowing.

• The Fed staff expects fourth-quarter gross domestic product growth to “slow markedly” from the third quarter’s nearly 5% rate noted in initial estimates, because of the still-uncertain impact from the United Auto Workers’ strike against
  Ford Motor,

  General Motors,
  and
  Stellantis.

What’s Next: Despite the economic dangers policy makers cited, futures markets are putting a nearly 100% probability on a rate pause at the Fed’s December meeting and an almost equal probability on a pause in January, according to the CME FedWatch tool.

—Megan Leonhardt and Janet H. Cho

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Buffett Says He’s Playing in Extra Innings, Talks Succession

Berkshire Hathaway’s
Warren Buffett was talking succession again, and in a fresh update he said the company has the right CEO to succeed him. He also said he has the right Board of Directors as he made a donation of $866 million of Berkshire stock to four family philanthropies on Tuesday ahead of Thanksgiving.

• In a letter posted on the Berkshire website, Buffett, 93, wrote that he feels “good but fully realize I am playing in extra innings.” Berkshire has identified the company’s vice chairman Greg Abel, who heads its non-insurance businesses, as Buffett’s likely successor.

• Buffett also said his three children, Howard, Susan and Peter, are executors of his will and will be trustees of the charitable trust that will receive nearly all his wealth. This appears to be a new disclosure.

• “They were not fully prepared for this awesome responsibility in 2006, but they are now,” he said. “In administering the testamentary trust, the three must act unanimously. Because of the random nature of mortality, successors must always be designated.”

• Buffett began giving away his Berkshire stock in 2006 and has donated more than half of his stake in the company since then. The bulk of the donations have gone to the Bill and Melinda Gates Foundation.

What’s Next: Buffett’s succession plan has always been an issue for Berkshire investors, and they will take heart from the billionaire’s confidence in those around him. For now, Buffett seems to be enjoying his “extra innings,” as he should.

—Andrew Bary and Callum Keown

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Ford Scales Back Ambitions for EV Battery Plant

Ford Motor has resumed work at a Michigan battery plant, but will invest less than the $3.5 billion initially planned and will cut production capacity there by more than 40%. The auto maker said it is still bullish on electric vehicles, though the growth rate and demand are lower than expected.

• The Marshall, Mich., plant will employ about 1,700 workers instead of about 2,500 when it opens in 2026. It will be Ford’s first battery plants of their kind, the company said. Batteries from the plant will use a less-expensive type of chemistry expected to make EVs more affordable.

• Congressional Republicans have criticized the project’s plans to use technology from China’s Contemporary Amperex Co., the world’s largest battery maker. They say it shouldn’t qualify for federal Inflation Reduction Act subsidies, and that EVs with the company’s batteries shouldn’t be eligible for $7,500 tax credits for domestically sourced batteries.

• Ford has said it would wholly own the factory and would create American jobs, and that the decision to downsize wasn’t related to political scrutiny. EV sales are up 12.% this year, but the pace of growth has cooled, according to Motor Intelligence data.

• Separately, despite crashing prices for lithium, cobalt, and other metals used to make EV batteries, Lithium Americas is developing a lithium mine in Nevada with General Motors’ backing, and
  Exxon Mobil
  has started to drill for lithium in Arkansas and plans to start producing battery-grade lithium by 2027.

What’s Next: By 2030, when the Biden administration wants half of all new vehicle sales to be electric, demand for lithium is expected to more than triple to 3.1 million metric tons and outpace supply by nearly 400,000 tons, according to Benchmark estimates.

—Janet H. Cho

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Dear Quentin,

I live in Florida. I think my husband wants a divorce. I purchased my house a short while before we got married about six years ago. The deed and the mortgage are in my name only (actually, I haven’t even changed it to my new last name).

I have about $80,000 to $100,000 worth of equity. Everyone keeps telling me he could force me to sell the house and give him half of the proceeds. He says he wants me to sign a contract where he would get 20%. I don’t want to sell, and I don’t want to give him anything if I do.

I don’t think he is going to even live another year due to liver failure from alcohol/drug misuse (which has not stopped even after his diagnosis). So it seems that he could divorce me and force me to sell my home and give him half the money, and squander half of the proceeds.

He is on disability and pretty sick right now. I won’t file for divorce and I doubt he can afford the filing fees, much less an attorney. He has done physical work on the house, but I have always paid the mortgage out of my own, separate bank account that he does not contribute to.

Also I don’t feel like I owe him anything. He does have an adult daughter, who I would assume would be the one to end up with it. Is this correct or do I have other options? Thank you for any advice you can give me on this situation.

—Wife and Homeowner

Read the Moneyist’s response here.

—Quentin Fottrell

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner