• This Silicon Valley giant just wrote down a $408 million acquisition
  • Supercharged AI is here now
  • Coronavirus is responsible for spreading… malware?

Dear Reader,

It appears obvious to me that the supply chain disruptions to the tech and biotech industries are definitely going to carry into next week. The numbers today are hard to believe.

Just in the last 24 hours, almost 4,000 new cases of the coronavirus have been reported, and 66 more people have died. That brings the totals – that we know of – to 24,554 confirmed cases and 491 deaths… and growing rapidly.

The challenge in dealing with this outbreak has become so severe that the World Health Organization is asking for $675 million to support a global preparedness and response plan between now and April… just for three months…

I’ll continue to update readers as this situation progresses. But for now, let’s get to today’s insights…

Intel’s failed $408 million acquisition…

Some readers say I come down too hard on Intel, but I recently complimented the company on its smart acquisition of Habana Labs. As usual, there is more to the story…

Intel just announced that it is shutting down all development from the artificial intelligence (AI) semiconductor team it gained through its acquisition of Nervana back in August 2016.

There goes $408 million right down the drain. At the time, the acquisition was a heralded move. Nervana was said to have the most advanced semiconductor for neural network training and “inferencing,” an interesting area of AI.

Apparently, Intel didn’t do a very good job on its technical due diligence at the time of the acquisition. Nearly three years later, Intel is putting the Nervana acquisition to bed. Nervana’s chips just haven’t performed up to customer expectations.

The problem was so exacerbated… and Intel continues to fall so far behind in AI and machine learning applications… that the company was forced to make yet another acquisition… the Habana Labs deal.

There was speculation in the industry as to the overlap of the Nervana products and what Habana Labs has already produced. And rightfully so. We now know that all of Intel’s development will be focused on the Habana Labs products.

This is yet another embarrassing moment for Intel. It threw away $408 million dollars on Nervana only to be forced to go out again and spend five times as much on Habana Labs in an effort to catch up. And it speaks to the poor job Intel did in managing its Nervana assets.

And that’s my biggest concern with the Habana acquisition. Habana’s tech is great. I mentioned before that it was one of my favorite private tech companies that I had been watching, hoping for a future IPO.

But will Intel be able to manage the acquisition wisely? I remain skeptical. In fact – as you’ll see in our next insight – Intel’s Habana AI semiconductors might already be falling behind.

I do wish Intel good luck. But I’d put my money on NVIDIA (NVDA) over Intel any day. (In my Near Future Report service, we’re currently up over 77% on NVIDIA.)

This early stage company just released a transformational AI product…

An early stage company called Groq just released an AI accelerator card capable of performing one quadrillion operations per second. That’s a one followed by 15 zeroes.

Simply put, this card is going to transform the AI industry.

We can think about it this way… Groq’s AI accelerator is four times more powerful than NVIDIA’s most powerful AI card. And its latency is 320 times better.

As a reminder, latency refers to the delay in processing. This is critical when it comes to running AI at the edge of networks. This is especially true for critical tasks.

Let’s use a self-driving car to illustrate how important this is…

Suppose a self-driving car gets into a dangerous situation. It needs to respond immediately to avoid a tragedy. There simply isn’t time for delay. Every millisecond counts in a situation like that.

But by running AI at the edge of the network with Groq’s accelerator, the autonomous car can process the data and execute a maneuver in close to real time. This maximizes the chance for a safe outcome and the avoidance of an accident or even an injury or death.

So self-driving vehicles are a perfect application for Groq’s product. Groq can run the neural network in real time so self-driving cars get immediate responses.

Of course, there are countless more applications for an AI accelerator card like this. Anything running AI out in the field will want to use Groq’s technology. And the technology is just as valuable in a data center.

It’s also worth mentioning that Groq’s technology can run circles around anything that Intel has… and that includes the Habana Labs acquisition.

This is a great example of why I am so excited about AI this year. This kind of hardware is what enables accelerated development of the AI software that will transform our lives. We’ll soon be living among and greatly benefiting from intelligent machines.

The media will give airtime to exciting AI software applications that capture the imagination. But for investors, many of the largest returns will be found in AI hardware. Rest assured, I’m on the lookout for the best AI hardware companies for future recommendations…

The coronavirus is being used to spread malware…

We’ll wrap up today with a public service announcement…

Cybersecurity firm Kaspersky just reported that cybercriminals are using the coronavirus pandemic to spread malware. These criminals have been sending emails to people in Japan telling them that there has been an outbreak in their town or prefecture. The emails then tell recipients to open an attached Word document, MP4 file, or PDF to get more information about the actions they must take to stay safe.

But when opened, the attached document installs a nasty Trojan virus called Emotet. This is sophisticated malware that infects all computers on a network once installed. From there, it is very good at searching for private information like user IDs and passwords. Bank accounts are its primary target.

Of course, cybercriminals use this information to empty out bank accounts whenever Emotet is successful.

Sadly, many people in Japan have fallen for this scam. And it’s not just individuals. These cybercriminals are targeting businesses and government departments as well.

So please take this as a word of warning. We should always be skeptical of any documents we receive via email. If there’s any doubt about who a document came from or why it was sent, we shouldn’t open it.

And that goes for links in emails also. We should never click any link unless we are sure that it’s not a scam.

As for the coronavirus, the World Health Organization (WHO) posts a daily status report of what’s happening on the ground. It’s not perfect, but that’s where we should look if we have any concerns about an outbreak near us. Going directly to the source completely avoids any risk of getting infected by the Emotet virus…


Jeff Brown
Editor, The Bleeding Edge

P.S. And one last reminder for readers that my colleague E.B. Tucker is hosting an investing webinar tonight at 8 p.m. ET.

E.B. has developed an investing strategy outside of everyday stocks, bonds, or options. He calls them “Omega shares.” And one of these Omega shares just gave his readers a gain of 915%.

Go here to find out more.

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