Finimize - 👀 Nvidia's big reveal

What’s going on here?

Nvidia announced the next generation of AI chips on Monday, determined to become as ever-enduring and irreplaceable as a staple biker jacket.

What does this mean?

Nvidia’s success has put fire in the bellies of its rival chipmakers. So to stay as the plus-one of ambitious tech companies, the company's rolling out a souped-up version of its signature graphics processing chip – the type that Microsoft and Meta spend billions on. The new “Blackwell” chip is five times more powerful than the last version, which would let pioneering companies create bigger, smarter, more complicated AI systems. That should keep Nvidia hanging with Big Tech at the top of the stateside stock market. Only if the chipmaker can deliver, of course. Nvidia’s fallen behind on orders for its current bestseller, see, which might explain why the stock barely moved when initial word of the new chips spread.

Why should I care?

Zooming out: Codependency is unhealthy.

Chipmaking competitors like Cerebras and Groq, along with stalwarts Intel and AMD, are all jostling for Nvidia’s business. So to keep Big Tech customers on its books, Nvidia needs to make sure that it’s making the most advanced chips on the market. That strategy has served it well so far. The chipmaker’s stock has blasted 1,900% higher in the last five years, making it the third-biggest public company in the US. The only hitch: Google, Amazon, and Microsoft currently crafting their own AI chips to become less dependent on outsiders.

The bigger picture: Time for a backup plan.

Nvidia’s all too aware that its you-scratch-my-back relationship with Big Tech could fall apart. That’s why the company’s exploring avenues usually left to sci-fi scriptwriters, like chips to power humanoid robots that mimic human expressions and movements. Remember, Nvidia’s pulled itself out of a ditch before, not least when demand for its chips was dragged down when the cryptocurrency mining sector tanked.

What’s going on here?

The Bank of Japan (BoJ) finally ended its eight-year run of negative interest rates.

What does this mean?

Japan’s economy has long suffered from deflation, or falling prices, which makes economic success something of a pipe dream. So the BoJ has held a key short-term interest rate in the negative since 2016, making it cheaper for folk to borrow and spend money. At long last, those years of bargain borrowing have sent prices in the right direction, with the central bank predicting that inflation will hover near its 2% target for some time. That’s why the BoJ just voted to bring that short-term interest rate up to a range of 0% to 0.1%, its first time in the green in nearly a decade.

Why should I care?

Zooming in: They’ll take it from here.

The BoJ also said it’ll stop interfering with the stock market by buying exchange-traded funds and real estate investment trusts. Plus, it’s doing away with the existing “yield control” program, which capped long-term interest rates to support the economy. In other words, Japan’s loosening the reins. There’s a reason it’s trusting consumers to carry the economy now. Unions and companies representing seven million workers agreed to set wages 5.3% higher this March than last, the biggest upgrade since 1991. That’s more than double the 2.2% inflation rate, so shoppers should have plenty of cash to splash.

For markets: Weaker yen, stronger markets.

Japan’s new 0.1% interest rate pales in comparison to the US’s 5.25%. Plus, traders don’t expect Japan to bring that rate much higher anytime soon. So because lower interest rates make a currency less attractive to international investors, the Japanese yen lost value against the US dollar after the BoJ’s announcement. That said, a weaker yen bolsters the overseas profit of Japanese exporters like Toyota – and that’s sent the country’s stock market on a climb after the news broke.