Bloomberg Technology has been covering major strategic moves impacting both the technology and financial sectors, including NVIDIA's substantial investment in Synopsys, the continuing fears of "circular financing" in AI, and significant risk-off sentiment hitting the crypto market. Bloomberg Technology noted that NVIDIA has struck a deal to invest $2 billion into the chip design software company Synopsys. This transaction, in which NVIDIA is buying stock at $440 a share while Synopsys was trading slightly lower at $432.52, is framed as an engineering agreement to integrate NVIDIA technology into the Synopsys platform.
The investment, according to coverage by Bloomberg Technology, is widely viewed as NVIDIA strengthening its relationship with its suppliers, including those like Synopsys, which provides Electronic Design Automation (EDA) software, an area characterized as an oligopoly. While some analysts suggest that EDA—the software tools used to lay out a chip's design—is the next frontier for improvement with AI, others argue that the investment is more about strengthening supplier relationships, with potential for future M&A plays. NVIDIA CEO Jensen Huang specified that there is no purchasing relationship tied to the investment, though Synopsys is already a customer that will become a much larger customer as they move into the world of accelerated computing and AI computing.
The investment, however, renews concerns around circular financing. As Bloomberg Technology reported, this is "front and central" in investors' minds, as NVIDIA has been investing in firms that are or will be major customers of its products. This practice raises concerns because circular financing makes an ecosystem fragile, meaning "one disappointment" could cause "the whole loop to fall apart". This nervousness is persistent, despite the fact that AI technology itself is considered solid and known to increase productivity.
Meanwhile, Bloomberg Technology covered the broader market sentiment, which started the month in a "risk off mode". Tech stocks were lower, and crypto suffered. Bitcoin dipped below $84,000, and Ether dropped more than 7% below $2800. This crypto selloff is not due to typical crypto events like fraud but is instead attributed to crypto starting to mature and follow the macro environment, behaving more like risk assets.
The primary catalyst for the market turnaround was the Bank of Japan adopting a more hawkish tone, ramping up expectations for a December rate hike. This sparked concern about the unwinding of the carry trade, where investors borrow in low-interest yen to invest in higher-yielding, riskier assets. If the Bank of Japan raises rates, triggering the repatriation of those funds back to Japan, the resulting liquidity changes will severely impact sectors like crypto and tech, which are highly sensitive to liquidity. Additionally, Bloomberg Technology noted that institutional demand for crypto remains weak, with November seeing ETF outflows of $3.48 billion, the second-worst month recorded so far.
In another major AI development, Bloomberg Technology reported that OpenAI has agreed to take an ownership stake in Thrive Holdings, an investment vehicle, with the goal of accelerating enterprise AI adoption. OpenAI plans to embed its own teams to help the businesses Thrive Holdings invests in become more efficient with AI deployment. This deal also has the "appearance of circularity," given that Thrive Capital played a pivotal role in backing OpenAI for the last couple of years.
Bloomberg Technology also tracked significant consumer activity during the holiday shopping season. Despite economic uncertainty, U.S. shoppers opened their wallets on Black Friday. Shopify, a global commerce company, saw 6.2 billion in sales over the Black Friday weekend, with peak sales reaching 5.1 million per minute. Cross-border transactions accounted for 17% of all orders, and AI-driven traffic to Shopify has been up six times since January. This illustrates that consumers remain geographically agnostic, buying from brands they love regardless of where they are located.
