OpenAI says its Broadcom chip is a big advance. What about Nvidia?
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Stocks are slightly higher on Tuesday, with the S & P 500 on track to recover nearly all of Monday’s dip. The market is getting a boost from falling oil prices and bond yields, along with generally better sentiment around AI names. OpenAI said Tuesday that testing results of its new custom inference chip “show a significant performance advance.” The processor, known as Jalapeño , was announced in June in partnership with Broadcom and was dubbed an important milestone in OpenAI’s strategy to build the full stack behind its models and products. Google is the best example of a full-stack AI company. Lots of AI companies like to claim their architectures and models are the industry’s best, but Jalapeño received some independent, third-party validation by SemiAnalysis. In Tuesday’s announcement, OpenAI said Jalapeño “can process more AI workloads per unit of power while also delivering faster responses,” while existing hardware systems “often require a trade-off between the two.” OpenAI said it plans to begin deploying Jalapeño in its compute infrastructure by the end of the year. This should add some much-needed credibility to Broadcom’s FY2027 AI revenue outlook of more than $100 billion. But this news doesn’t change our thinking about the political pressure facing data center construction and our decision to cut our Broadcom position in half on Monday. Expect CEO Hock Tan to get asked about the sales ramp on Broadcom’s Sept. 2 earnings call. OpenAI’s news shouldn’t be seen as the beginning of the end of its partnership with Nvidia . Just last week, Nvidia said it would provide up to $105 billion in credit support for OpenAI’s massive data center project in Ohio, which will exclusively use Nvidia compute. OpenAI also said it expects to “widely deploy accelerators from Nvidia and other partners for both training and inference workloads.” Competition from custom-designed chips is a frequent topic on Nvidia’s earnings calls, and we expect CEO Jensen Huang to be asked about it again Wednesday night. Intuit and Zoom report after the closing bell on Tuesday. Before the opening bell on Wednesday, we’ll see earnings from Kohl’s , Abercrombie & Fitch , Williams-Sonoma , and JM Smucker . On the data side, we’ll get the Fed’s preferred inflation gauge, the PCE price index, as well as the second read on second-quarter GDP and durable goods orders. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
