Dear Reader,
Who would have thought that Jensen Huang, the high priest of silicon, would be pushed out so indecorously? We watched him stride across the globe like a Colossus in his trademark black leather jacket, preaching the gospel of accelerated computing and generative AI, and naturally assumed there were no bugs in his operating system. Who knew that humanity’s glorious march towards Artificial General Intelligence would be held hostage by one billionaire’s inability to keep his unauthorised background applications off the main server?
Should he not, at the very least, have asked Claude, or ChatGPT, or Grok or Deepseek before his romantic escapades? Or was he under the impression that AI stood for Amorous Indiscretions? Whatever the reason, it took remarkably little time for High-priest Huang to turn into Hanky-panky Huang. No wonder, his lady love and alleged spy Alice Huang’s Singapore firm is called Megaspeed. My heart bleeds for the black leather jacket, that epitome of biker chic, which will now be branded forever as the official uniform of the mid-life honeytrap victim.
But watching the US media pivot from uncritical tech-bro worship to pearl-clutching moral outrage over an unproven espionage plot has been truly a sight to behold.
With the theme song from the James Bond film ‘The Spy Who Loved Me’ playing in the background this week, this FT story, free to read for Moneycontrol Pro subscribers, said that with Huang’s fall, the risks of giving leaders free rein when AI is at the heart of the economy, national security and just about everything else, are now clear. Another story said that the Jensen jeopardy will disrupt the AI industry.
It’s not just the AI industry that is at stake. Howard Marks has pointed out that according to JPMorgan, 42 AI-related companies accounted for around two-thirds of the S&P 500’s price gains since January 2024. Such concentration makes markets vulnerable to setbacks in AI, whether related to chip life, corporate strategy or demand for computing capacity. And, we would now add, vulnerable to a CEO’s shenanigans.
Huang’s exit raises questions about whether his policies will be continued, including, crucially, whether his policy on making huge investments and issuing guarantees for businesses that buy Nvidia’s GPUs will be reined in. That could have big consequences for the AI trade, already under pressure after the change of guard in the US Congress. Simply put, uncertainty has gone up and the smaller and more vulnerable players are already feeling the heat. The AI trade from here will perhaps be about spreading bets across suppliers, being wary of leverage and watching Tuesday’s Nvidia earnings call for the first hint of how the customers, and the interim CEO, are behaving. The easy trade, owning the one name through which everything flowed, has been shaken. As my colleague Abhijit Dutta points out, a shakeout looks inevitable.
That brings us to the so-called anti-AI trade, of which foreign investors seem to believe India is an exemplar. And why not? We pointed out that the strongest RoE in at least 16 years for Corporate India creates a strong fundamental reason for a return of foreign investors to India. We said global brokerages have turned more constructive on India and that the early November fund flows and the cluster of upgrades suggest that a meaningful part of global capital is now looking at India. That is buttressed by the fact that, as this piece points out, the 10 largest US-based actively managed global growth mutual funds currently have an average non-US equity allocation of 28 percent. That is well under the 35 percent share that non-US stocks have of the market capitalisation of both the global growth and overall global equity universes. The author, the global head of macro investing at Janus Henderson Investors, says it’s a once in a lifetime opportunity to invest in non-US stocks.
The serious point beneath the gags is that chips are now an instrument of statecraft. As Vivek Kelkar argues in his column on LNG Geopolitics, the battle is shifting from controlling resources to controlling access, and that is as true for AI chips as it is for gas. A world that worries about who has access to what is a world that spends a lot on defence. Which is why we wrote about Bharat Forge, Data Patterns and HAL this week and whether they should find a place in your portfolio.
But the question is: Do the foreign investors currently flocking to the Indian markets have commitment? One school of thought holds that India is increasingly a tactical trade, not a structural one. A fling, in other words, rather than a longer relationship. And flings, as we have seen, could be dangerous. This column says that without conviction buying, as derivatives data suggest, the Nifty’s rally may prove hard to sustain.
And then there’s inflation, which breached the 6% mark in October and is becoming more broad-based. That means monetary policy is likely to get tighter in India, together with the end of cheap money for Corporate America. On Friday, Indian equity markets wobbled a bit, as did the rupee, while bond yields moved up.
Will the anti-Huang trade be good for India? At the moment, global markets are Huang in the balance, and the world is nursing a terrible Huangover.
As to what on earth Huang was thinking, Carly Simon’s ‘Nobody Does It Better’, the theme song from The Spy Who Loved Me, may offer a clue. It is, after all, a song about being found by someone you weren’t looking for — and trusting them to keep your secrets safe. Alleged spies, it turns out, aren’t always reliable on that last point.
Cheers,
Manas Chakravarty
In case you missed them, here are some of the other stories and insights we published this week, apart from our technical picks in the equity, commodity, and forex markets:
Stocks
IKS Health, CONCOR, UltraTech Cement, PN Gadgil Jewellers, Tata Power, Gokaldas Exports, This NBFC-MFI has turned the corner and is evaluating the next phase, This biscuit giant sees strong growth, but inflation clouds outlook, Thermax, Tata Steel, Hindalco, Lenskart
Financial Times
Mohamed El-Erian: What markets want from the Democrats
Companies & Sectors
The revolution in India’s solar module manufacturing sector
A Rs 8,400-crore potential bill for Yes Bank – Should investors be worried?
Gland Pharma
Why global investors are targeting Indian lenders
Global headwinds put capital goods firms’ profits to test
REITs cash in on office boom, step up expansion
How El Nino is changing electricity generation patterns
Banks’ earnings mojo is here to stay, even with treasury headwinds
Fresh loans are fetching more and deposits costing less for banks
Economy & Policy
The two stories in India’s FDI numbers
India’s rising female labour force participation has an uncomfortable truth
Geopolitics & Geoeconomics
Trump’s MAGA message with new White House appointment
COP31 — Another summit, another set of unfulfilled promises?
COP31 should devise a systemic approach to combating climate change
Tech & Startups
Startup Street | Navigating the Dark Side: Scams targeting startups
