Nvidia like the Fed? Compute liquidity and the new rules of AI
The race for artificial intelligence is transforming Nvidia from a semiconductor manufacturer into a central node in the financing of compute capacity. The parallel with the Federal Reserve helps explain how the availability of an essential input can fuel investment, leverage and systemic risks. But banking history offers another lesson as well. It is not enough to ask who produces the new “compute liquidity.” We also need to monitor who uses it and what risks they may transfer to others. The challenge is to build prudential regulation for AI that promotes safety without protecting today’s giants from competition.
