"Masters of the Machine: The A.I. Leaders With Power, Influence, Capital and Vision"

From Observer, November

The future of artificial intelligence isn’t just being built in research labs—it’s being shaped by a small circle of power players who control the capital, strategy and vision of the industry’s biggest breakthroughs. From tech executives to investors and policy architects, these leaders are determining what A.I. becomes, what it prioritizes and how it impacts society. Meet the movers who are deciding the direction of the world’s most transformative technology.

The most powerful people in A.I. wield unparalleled influence over the future of the industry for one simple reason: money drives innovation. Unlike other sectors where progress can be piecemeal or self-sustaining, A.I. requires massive financial investment for research, computing power and the assembly of top-tier talent. This capital doesn’t just fund ideas—it dictates which ideas get to exist in the first place.

These power brokers—venture capitalists, tech titans, institutional investors and policymakers—decide which A.I. projects get the resources to move from a garage experiment to a world-changing product. They determine who has the financial runway to attract the best minds, access the latest hardware and afford the astronomical costs of scaling models that can gobble up millions of dollars in GPU hours just to train. Their decisions shape which innovations become mainstream and which remain stuck in the lab, no matter how groundbreaking they might be.

Even more crucially, controlling capital means setting the priorities and ethics of the field. Investors aren’t just picking winners and losers; they’re defining what “winning” looks like. By choosing to fund certain projects over others, they implicitly endorse particular applications, risks and philosophies about what A.I. should—and shouldn’t—do. When the industry’s most prominent backers pour billions into autonomous weapons, mass surveillance or unregulated A.I. models, they signal to the world that these are the avenues worth pursuing. Conversely, if they back startups focused on human-centric, ethical A.I. or technologies that enhance rather than replace human labor, they set a very different precedent for what the future holds.

The stakes are monumental because the flow of capital influences not only what products get built but also the rules governing them. Investors like Andreessen Horowitz, SoftBank, and even the VC arms of companies like Microsoft and Google have a vested interest in ensuring favorable regulatory conditions, meaning they can shape policy debates and public perceptions just as effectively as any lobbyist. The result is an industry roadmap that’s dictated less by technical feasibility and more by financial might.

In short, the people steering capital don’t just grease the wheels of A.I. innovation—they hold the keys to the car, the map and even the road itself. They’re deciding which risks to take, which ethical dilemmas to confront or ignore, and which futures are worth pursuing, making them the ultimate gatekeepers of A.I.’s trajectory.

A.I. Power List: Criteria Breakdown

The criteria defined below (risk, impact, speed and growth) are not just boxes to tick; they are the lens through which we view the tectonic shifts in A.I. over the last two years—a period marked by unprecedented investments, headline-grabbing acquisitions and bold, sometimes controversial, moves that will define the landscape for years to come.

RISK
Risk-takers are the ones who change the game. At Google, Eric Schmidt instituted a policy allowing employees to devote 20 percent of their time to any project they’d like. It was a risky move in the name of innovation that more narrow-minded leaders might dismiss as wasteful of resources or low ROI. But, as Schmidt tells Observer, “This helped foster a culture of creative thinking and interdisciplinarity at the company, generating some of our most successful initiatives. In the age of A.I., innovation will similarly come from taking risks and experimenting with bold, new ideas.”

Whether it’s a venture capitalist betting the farm on an unproven A.I. startup or a CEO pivoting an entire company’s strategy towards A.I., these individuals have made bold moves that could pay off spectacularly or lead to colossal failure. But it’s precisely this willingness to gamble that sets them apart from the cautious majority. Take, for instance, Tesla’s audacious push to integrate A.I. into autonomous driving, a move that could revolutionize transportation—or violently implode. The jury’s still out, but the risk is undeniable.

IMPACT
The individuals on this list have had a measurable influence on how A.I. is developed, deployed and regulated—impacting the future of policy, culture and the flow of capital across borders and industries. Think of the billions of dollars funneled into A.I. research and development. Consider the mergers and acquisitions that have shifted the balance of power in the tech industry. When Microsoft backed OpenAI with a multi-billion-dollar investment, it wasn’t just a vote of confidence in A.I.—it was a strategic move to dominate the next frontier of technology. Of course, these ideas and actions create titans of tech. More importantly, they define the next generation of leaders in culture and policy.

From the start, Congresswoman Yvette Clarke has championed the need for inclusive and equitable A.I. policies that benefit all communities, particularly those historically marginalized. She’s tirelessly pushed for comprehensive legislation that addresses the social and economic impacts of A.I. to ensure that such advancements do not exacerbate existing inequalities.

“The only way ahead is to establish comprehensive policies prioritizing the rights and privacy rights of all Americans,” Clarke tells Observer. “Digital environments do not take away our civil liberties, and substantial regulation is necessary to ensure they never do. Moving forward, all discussions on A.I. must focus on pursuing responsible advancement.”

SPEED
In A.I., speed is everything. The pace at which these leaders move—whether by starting earlier than their competitors or accelerating faster than the rest—sets them apart. Well before ChatGPT became a punchline for late-adopters, traditionalists and critics, Jeff McMillan tapped OpenAI to create a personal assistant for Morgan Stanley’s advisors to chat with, tapping into a large portion of its collective knowledge. Under McMillan’s leadership, the investment bank is leveraging data and organizational AGI to create a massive competitive advantage.

“A.I. innovation requires a deep curiosity about the world and how it works and the creativity to imagine new possibilities and solutions,” McMillan tells Observer. “Being open-minded is crucial. This means being receptive to new ideas, perspectives and techniques.” 

Technology is defined by its breakneck pace; today’s innovation is tomorrow’s standard. Like McMillan, the leaders on our list have consistently been ahead of the curve, setting trends rather than following them. Consider the recent wave of AI-driven startups that have secured record-breaking funding in mere weeks, capitalizing on the frenzy of investor interest in machine learning and automation. Mistral AI, not two years old, has soared to a $6 billion valuation. These leaders are moving so fast that they’re not just keeping up with the future but creating it.

GROWTH
The people on this list aren’t just influential now—they’re poised to continue their ascent. Multiple indicators indicate that these individuals are likely to keep pushing the envelope, advancing their industries and driving the A.I. narrative forward. 

“I was inspired by the idea that there could be a few simple principles, like the laws of physics, that would explain our intelligence and allow us to build intelligent machines,” Yoshua Bengio,  one of the most widely cited scientists in the world, tells Observer. Looking ahead, he adds, “I hope we will have solved the riddle of how to design A.I. that is safe from catastrophic misuse and loss of control.”

From the steady stream of innovations emerging from their labs to their growing influence over policy, culture and public perception, these Power Listers are far from reaching their peak. The recent surge in A.I. patents, the increasing number of A.I.-driven products hitting the market, and the escalating arms race for A.I. talent all point to a future where their influence will only grow.

Over the last two years, A.I. has evolved from a buzzword to a transformative force in nearly every sector. The people on this list aren’t just participants in the revolution—they lead it. They’re strategists, risk-takers and visionaries. These people are shaping the future, one bold move at a time. And in the fast-paced, high-stakes world of A.I., there’s no prize for second place.

The Most Important Players in A.I.....

 

....MUCH MORE (the players)

"Are We Accidentally Building A Planetary Brain?"

If so let's hope it is at minimum, somewhat intelligent.

From Noema, November 19:

From superorganisms to superintelligences, how studying crabs could reveal that we are unintentionally building an artificial world brain.

One Sunday in April 1930, actors in “little shiny pants” performed an extremely strange play in London titled, “Brain: A Play of the Whole Earth.”

A blurb summarizing the plot stated: “A Brain is constructed in the Sahara Desert — presently It grows larger than the Desert — out of pure mechanism, by the whole of the human race, It controls the whole activities and does all the thinking of the world.”

Written by obscure outsider Lionel Erskine Britton, a working-class intruder within London’s literary elite who had first worked in a factory at age 13, the play depicted the construction of an artificial superintelligence, in the form of a synthetic brain “creeping over the world.”

Humans in the play slowly lose all autonomy and come to function — in strict unison — like neurons making up one vast global ganglion. The play revolted most critics.

But Britton, an ardent socialist with Stalinist sympathies, openly celebrated this imagined future. While he was not alone in predicting something like it, others, by contrast, portrayed it as an oncoming catastrophe.

Whether they were cheered or chilled by the prospect, multiple forecasters imagined contemporary developments culminating in some kind of planet-sized brain that would perform executive function at an intercontinental scale, dictating affairs like a global frontal lobe.

This, after all, was not only an era of collectivism and roiling mass movements. It was also the moment when entomologists were first making popular the notion of a “superorganism.” Just as ants cooperate to forge an anthill — generating a whole far more potent than the sum of its parts — it became pertinent to ask whether globalizing humanity might — intentionally or not — be birthing a new form of planetary intelligence, fathoms more sovereign than any individual or national institution.

What follows is the story of how a century ago, forgotten voices foresaw the present dawning age of synthetic intelligence: envisaging futures wherein humans might cede their role as the apex cogitator and become subsumed within budding systems of nonhuman cunning.

More profoundly, their unease regarding the future of human sovereignty and solidarity rings even truer today. As our climate deteriorates and geopolitical stability crumbles, there have been renewed calls for planetary coordination and control, whether through geoengineering or governance.

We live in an era when pathogens and emissions make a mockery of national borders, when consequences cascade and harms are no longer solely local. Accordingly, disquieting questions arise again: Can liberty survive in an age of planetary risk? What might agency look like in the era of thinking machines?

Visions of a planet artificialized by intelligence are not new. Though the future will undoubtedly prove weirder than anyone yet imagines, revisiting some of the stranger tomorrows imagined throughout the past might help us better navigate the present.

The Evolution Of Individuality

In the 1980s, the biologists Eörs Szathmáry and John Maynard Smith began theorizing that evolution has, over the course of its history, undergone several “major  transitions.” Each of these involved innovations in what counts as “an individual.” For example, the shift from cells without nuclei to ones with them; later, from single-celled to multicellular organisms; and later still, from solitary hunters to cooperating groups. Each transition, he proposed, produced more potent and complicated forms of life from the fortuitous integration of simpler, uncoordinated entities into a newly coordinating whole.

This entailed sacrificing autonomy for the previously individual parts. No longer the protagonist, they now became a mere means for the reproduction of the wider whole. Where their predecessors could survive and reproduce on their own, such skills now are lost. But, of course, there are benefits to foregoing solitary life.

Look to the mitochondria living within almost all your cells. Their forerunners were once independent bacteria: rugged individuals. Now they operate obediently as intracellular powerhouses fueling and furthering the body politic. If the mitochondria could speak, would they regret their change?

Naked mole rats provide another example. They are eusocial, meaning they cooperate and divide labor. Compared to other rodents their size, they also have minuscule brains relative to their bodies. But, as colonies they exhibit impressive feats of intelligence. Their individual lobes have withered because the true protagonist is the “brain” of the colony.

“Evidence shows human brains today are smaller than those of our ancestors. 

Perhaps we are drifting the way of the mole rat?”

 

....MUCH MORE

"Elon Musk’s first order of business in Trump administration: Kill remote work"

This is going to be all-out war.

From Fortune Magazine, November 21: 

Donald Trump appointee Elon Musk unveiled his first blueprint to radically shrink the federal bureaucracy, which includes a strict return-to-office mandate. This, he says, would save taxpayers hundreds of billions of dollars a year, if not more.

Together with partner Vivek Ramaswamy, Musk is set to lead a task force he has called the “Department of Government Efficiency,” or DOGE, after his favorite cryptocurrency. The department has three main goals: eliminating regulations wherever possible; gutting a workforce no longer needed to enforce said red tape; and driving productivity to prevent needless waste.

“With a decisive electoral mandate and a 6–3 conservative majority on the Supreme Court, DOGE has a historic opportunity for structural reductions in the federal government,” the pair wrote in an op-ed for the Wall Street Journal published on Wednesday.

2 million workers whose salaries are paid by every American taxpayer
They’ll start by cracking down on remote and hybrid forms of work among government employees.

Those no longer willing or able to come into the office five days a week can find gainful employment in the private sector.

They won’t be missed, according to the pair. They’re counting on a wave of voluntary departures by bureaucrats to help them enact their plans.

According to a September congressional report, over 2 million Americans are gainfully employed by Uncle Sam. Importantly, this already excludes military personnel, the U.S. Postal Service, and most of the legislative and judicial branches.

“The number of federal employees to cut should be at least proportionate to the number of federal regulations that are nullified,” they argued. 

The ultimate goal is “mass headcount reductions across the federal bureaucracy,” according to the DOGE co-leads.

They didn’t provide specific numbers, but it would likely be modeled along Musk’s 80% cutback in Twitter’s workforce.

Contrary to prevailing opinion at the time, it did not prevent the social media company from maintaining service for users.

Musk and Ramaswamy target $2 trillion in federal cuts
Tesla and SpaceX CEO Musk has floated plans to cut $2 trillion from the federal budget, nearly a third of the $6.75 trillion fiscal total.

The proposal, unprecedented in scope, focuses on areas ripe for reform, according to Musk and biotech entrepreneur Ramaswamy.

Much of the federal budget—Social Security and other mandatory entitlements—would remain largely untouched owing to legal and political constraints, apart from efforts to address fraud.

Another $800 billion is earmarked for the Department of Defense, which recently failed its seventh consecutive audit, presenting opportunities for waste reduction.

However, their immediate goal is to slash the $500 billion in annual discretionary spending authorized by unelected bureaucrats rather than Congress.... 

....MUCH MORE

"There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries … and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it."

— Niccolo Machiavelli   

As noted in the introduction to October 20's "The Biden Administration Has Canceled Student Loans For More Than 1 Million In Government Jobs "

One way to divide a country by class is to observe who benefits and who pays for those benefits. In the U.S. it almost appears that we are elevating government workers to a Mandarin class with combined better pay, pensions, and workplace and tenure regulations than the people who pay their salaries. It is almost an unmentionable but very real caste system.

"Flour millers face supply crunch as wheat farmers tighten grip on stocks"

From Reuters, November 20:

• Summary

• Farmers in top exporting countries hold wheat for better prices
• Global wheat prices near four-year low amid bumper harvests
• Asian millers covered for 2 months' supply, Gulf for 45 days
• Russian farmers sell to earn high interest, but supply limited

SINGAPORE/CHICAGO, Nov 21 (Reuters) - Wheat growers in several exporting countries are reluctant to sell their crops with prices near four-year lows, traders, farmers and millers say, leaving flour makers with dwindling supplies and vulnerable to any potential upswing in prices.

 

Typically grain processors buy wheat three to four months in advance. But millers in Asia, including Indonesia, the world's No. 2 wheat importer, are currently covered for about two months, and in the Middle East, most grain processors only have up to 45 days of supplies, two millers and a trader said.

 

The limited supply held by flour makers reduces their buffer against any production shortfalls that would trigger a rally in world prices, with global reserves already projected to reach a nine-year low, and fuel food inflation.

 

Farmers are hoarding their crop as global wheat prices have slumped to their lowest since 2020 on solid output in Australia and Argentina and on improved growing conditions in major exporting regions including the U.S. and Black Sea region....

....MUCH MORE

"Battery unicorn Northvolt files for bankruptcy, upending Europe’s industrial plan"

From TechCrunch, November 21:

Beleaguered Swedish battery manufacturer Northvolt announced today that it was filing for bankruptcy in the U.S., striking a blow to Europe’s ambitions for homegrown lithium-ion batteries.

The company reportedly chose Chapter 11 in an effort to right its finances. 

Northvolt, which had soared for years on the back of strong fundraising and a string of announcements about new facilities, has stumbled of late. It laid off 1,600 employees, about 20% of its workforce, in September, and unloaded assets in November from its ill-fated purchase of Bay Area battery startup Cuberg....

....MUCH MORE

Earlier:
Batteries: Sweden's Northvolt Has Hired A Restructuring Expert

"The mafia’s latest bonanza: salmon heists"

Swim with the fishes indeed.

From The Economist, November 21:

Fish farming is big business in Chile. Stealing fish is, too 

WEARING HI-VIS jackets and heavy boots, the men in the CCTV footage almost look as though they are meant to be there—until one pulls out a gun. On March 20th at least ten men burst into a cold-storage facility in San Antonio, a port in central Chile, threatened its employees and made off in four lorries filled with salmon worth some 600m pesos ($616,000). Their plot was soon foiled. In April police recovered some of the fish in San Felipe, a nearby commune. And in August they arrested 11 people in connection with the heist. Officials behind the sting—dubbed Operación Santo Salmón (Operation Holy Salmon)—think the gang was planning to sell the goods during Lent, when Catholics forgo meat in favour of fish.

Robberies have become a big problem for Chile’s second-largest export business; salmon farming generated 6trn pesos in revenue and supported some 70,000 jobs in 2023. There were just two robberies in 2018, according to SalmonChile, which represents the country’s fish farmers. That number has since leapt sharply. Between 2019 and 2023 there were 158 salmon robberies, most of which targeted cargoes of fish being delivered by lorry. Many more are thought to go unreported.

The crime wave has battered the industry. SalmonChile puts losses since 2019 at more than 67bn pesos. Firms are spending more on insurance and tracking equipment. Lorry drivers are afraid, as the heists sometimes turn violent; two drivers were abducted during robberies earlier this year. Many firms are avoiding their usual delivery routes in the south. Some drivers have started wearing bulletproof vests. Ricardo García of Salmones Camanchaca, a fish-farming business, reckons that these additional expenses, combined with the losses, are costing the industry around 1% of its gross operating profits each year.

A couple of factors lie behind the recent rise in crime. Making off with a lorry-load of salmon—typically worth around 200m pesos—was always bound to be lucrative.....

....MORE

"Insane footage shows moment Russian ICBM slams into Ukraine in horror escalation"

The Russians did two things. 

1) they made sure the things work.

2) they showed the world the things work.

From the always measured and reserved Express, November 21: 

Reports say it was fired from Kapustin Yar test range in Russia's Astrakhan region and at the Yuzhmash defence plant in Dnipro.

Shocking footage has emerged showing what is believed to be the first use of an intercontinential ballistic missile (ICBM) in warfare by Russia.

Missiles were reportedly fired from Kapustin Yar test range in the Astrakhan region, hitting the Yuzhmash defence plant in Dnipro.

The dramatic video shows flashes lighting up the sky - believed to be six separate warheads of a R-26 Rubezh intercontinental ballistic missile.

Until now, the R-26 Rubezh had never been used since its conception in 2011. It was designed to carry nuclear weapons but is now seen as an outdated piece of equipment.

Though this was a conventional attack, it may have paved the way for a pontential nuclear strike by Vladimir Putin's forces....

....MUCH MORE including video. 

Also at The Express - BREAKING NEWS: Labour slammed over 'f***ing bonkers' £500m defence cuts as UK 'never closer' to WW3

Batteries: Sweden's Northvolt Has Hired A Restructuring Expert

From Bloomberg via Canada's Financial Post, November 20:

Sweden’s Northvolt AB hired restructuring expert Paul O’Donnell to oversee its main factory unit, as time runs short for the struggling battery maker to mend its finances outside of bankruptcy court.

O’Donnell, who has helped Thames Water engage with creditors, will become chairman of Northvolt Ett AB, the subsidiary that contains the flagship cell-manufacturing plant in northern Sweden. Northvolt has struggled to raise US$300 million in emergency funding, with Bloomberg News reporting on Friday that talks on the package were on the verge of collapse....

....MUCH MORE

October 8

Batteries: "Northvolt says subsidiary files for bankruptcy after project pulled"

So far it's compartmentalized but the parent company is also facing financing and sales problems, more after the jump....

***

...There was a reason we titled September 5's post "Portents" - "Portents: Sweden's Northvolt may postpone $5bn Quebec battery plant by up to 18 months". It was a sign of things to come, including September 25's Batteries: "Sweden’s Northvolt to Cut 20% of Staff Amid Liquidity Crunch"

"Nvidia (NVDA) Q3 2025 Earnings Call Transcript"

From Motley Fool Transcribing, November 20, 9:00pm:

NVDA earnings call for the period ending September 30, 2024. 

Nvidia (NVDA -0.76%)
Q3 2025 Earnings Call
Nov 20, 2024, 5:00 p.m. ET

Contents: 

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

....Colette M. Kress -- Chief Financial Officer, Executive Vice President

Thank you, Stewart. Q3 was another record quarter. We continue to deliver incredible growth. Revenue of $35.1 billion was up 17% sequentially and up 94% year on year and well above our outlook of $32.5 billion.

All market platforms posted strong sequential and year-over-year growth, fueled by the adoption of NVIDIA accelerated computing and AI. Starting with data center. Another record was achieved in data center. Revenue of $30.8 billion, up 17% sequential and up 112% year on year.

NVIDIA Hopper demand is exceptional, and sequentially, NVIDIA H200 sales increased significantly to double-digit billions, the fastest prod ramp in our company's history. The H200 delivers up to 2x faster inference performance and up to 50% improved TCO. Cloud service providers were approximately half of our data center sales with revenue increasing more than 2x year on year. CSPs deployed NVIDIA H200 infrastructure and high-speed networking with installations scaling to tens of thousands of DPUs to grow their business and serve rapidly rising demand for AI training and inference workloads.

NVIDIA H200-powered cloud instances are now available from AWS, CoreWeave, and Microsoft Azure, with Google Cloud and OCI coming soon. Alongside significant growth from our large CSPs, NVIDIA GPU regional cloud revenue jumped year on year as North America, India, and Asia Pacific regions ramped NVIDIA Cloud instances and sovereign cloud build-outs. Consumer Internet revenue more than doubled year on year as companies scaled their NVIDIA Hopper infrastructure to support next-generation AI models training, multimodal, and agentic AI, deep learning recommender engines, and generative AI inference and content creation workloads. NVIDIA Ampere and Hopper infrastructures are fueling inference revenue growth for customers.

NVIDIA is the largest inference platform in the world. Our large installed base and rich software ecosystem encourage developers to optimize for NVIDIA and deliver continued performance and TCO improvements. Rapid advancements in NVIDIA software algorithms boosted Hopper inference throughput by an incredible 5x in one year and cut time to first token by 5x. Our upcoming release of NVIDIA NIM will boost Hopper inference performance by an additional 2.4x.....

****

....GAAP gross margin was 74.6% and non-GAAP gross margin was 75%, down sequentially, primarily driven by a mix shift of the H100 systems to more complex and higher-cost systems within data center. Sequentially, GAAP operating expenses and non-GAAP operating expenses were up 9% due to higher compute, infrastructure, and engineering development costs for new product introductions. In Q3, we returned $11.2 billion to shareholders in the form of share repurchases and cash dividends. Well, let me turn to the outlook for the fourth quarter.

Total revenue is expected to be $37.5 billion, plus or minus 2%, which incorporates continued demand for Hopper architecture and the initial ramp of our Blackwell products. While demand greatly exceed supply, we are on track to exceed our previous Blackwell revenue estimate of several billion dollars as our visibility into supply continues to increase. On Gaming, although sell-through was strong in Q3, we expect fourth-quarter revenue to decline sequentially due to supply constraints. GAAP and non-GAAP gross margins are expected to be 73% and 73.5%, respectively, plus or minus 50 basis points....

****

....Questions & Answers:
Operator

[Operator instructions] We'll pause for just a moment to compile the Q&A roster. As a reminder, please limit yourself to one question. Your first question comes from the line of C.J. Muse of Cantor Fitzgerald.

Your line is open.

C.J. Muse -- Analyst

Yeah. Good afternoon. Thank you for taking the question. I guess just a question for you on the debate around whether scaling for large language models have stalled.

Obviously, we're very early here, but would love to hear your thoughts on this front. How are you helping your customers as they work through these issues? And then obviously, part of the context here is we're discussing clusters that have yet to benefit from Blackwell. So, is this driving even greater demand for Blackwell? Thank you.

Jensen Huang -- President and Chief Executive Officer

Our foundation model pretraining scaling is intact, and it's continuing. As you know, this is an empirical law, not a fundamental physical law. But the evidence is that it continues to scale. What we're learning, however, is that it's not enough, that we've now discovered two other ways to scale.

One is post-training scaling. Of course, the first generation of post-training was reinforcement learning human feedback, but now we have reinforcement learning AI feedback, and all forms of synthetic data generated data that assists in post-training scaling. And one of the biggest events and one of the most exciting developments is Strawberry, ChatGPT o1, OpenAI's o1, which does inference time scaling, what is called test time scaling. The longer it thinks, the better and higher-quality answer it produces.

And it considers approaches like chain of thought and multi-path planning and all kinds of techniques necessary to reflect and so on and so forth. And it's -- intuitively, it's a little bit like us doing thinking in our head before we answer your question. And so, we now have three ways of scaling, and we're seeing all three ways of scaling. And as a result of that, the demand for our infrastructure is really great.

You see now that at the tail end of the last generation of foundation models were at about 100,000 Hoppers. The next generation starts at 100,000 Blackwells. And so, that kind of gives you a sense of where the industry is moving with respect to pretraining scaling, post-training scaling, and then now very importantly, inference time scaling. And so, the demand is really great for all of those reasons.

But remember, simultaneously, we're seeing inference really starting to scale up for our company. We are the largest inference platform in the world today because our installed base is so large. And everything that was trained on Amperes and Hoppers inference incredibly on Amperes and Hoppers. And as we move to Blackwells for training foundation models, it leads behind it a large installed base of extraordinary infrastructure for inference.

And so, we're seeing inference demand go up. We're seeing inference time scaling go up. We see the number of AI native companies continue to grow. And of course, we're starting to see enterprise adoption of agentic AI really is the latest rage.

And so, we're seeing a lot of demand coming from a lot of different places.

Operator

Your next question comes from the line of Toshiya Hari of Goldman Sachs. Your line is open.

Toshiya Hari -- Analyst

Hi. Good afternoon. Thank you so much for taking the question. Jensen, you executed the mass change earlier this year.

There were some reports over the weekend about some heating issues. On the back of this, we've had investors ask about your ability to execute to the road map you presented at GTC this year with Ultra coming out next year and the transition to Rubin in '26. Can you sort of speak to that? And some investors are questioning that, so if you can sort of speak to your ability to execute on time, that would be super helpful. And then a quick part B....

....MUCH MUCH MORE

"Jensen Huang says the 3 elements of AI scaling are all advancing. Nvidia's Blackwell demand will prove it." (NVDA)

This is a serious issue over the next couple years, some recent links after the jump.

From Business Insider, November 21:

• Reports on an AI progress slowdown raised concerns about model scaling on Nvidia's earnings call.
• An analyst questioned if models are plateauing and if Nvidia's Blackwell chips could help.
• Huang said there are three elements in scaling and that each continues to advance.

If the foundation models driving the panicked rush toward generative AI stop improving, Nvidia will have a problem. Silicon Valley's whole value proposition is the continued demand for more and more computing power.

Concerns about scaling laws started recently with reports that OpenAI's progress in improving its models was slowing. But Jensen Huang isn't worried.

The Nvidia CEO got the question Wednesday, on the company's third-quarter earnings call. Has progress stalled? And could the power of Nvidia's Blackwell chips start it up again?

"Foundation model pre-training scaling is intact and it's continuing," Huang said.
He added that scaling isn't as narrow as many think.

In the past, it may have been true that models only improved with more data and more pre-training. Now, AI can generate synthetic data and check its own answer to —in a way— train itself. But, we're running out of data that hasn't already been ingested by these models, and the impact of synthetic data for pre-training is debatable.

As the AI ecosystem matures, tools for improving models are gaining importance. The first generation of post-training improvement for models came from armies of humans checking AI's responses one by one.

Huang shouted out OpenAI's Strawberry or o1 model, which uses more modern strategies like "chain of thought reasoning" and "multi-path planning." These are both tactics that encourage the models to think longer and in a more step-by-step fashion so that the responses are more considered.

"The longer it thinks, the better and higher quality answer it produces," Huang said.
Pre-training, post-training improvements, and new reasoning strategies all improve models, Huang said. Of course, if the model is doing more computing to answer the same fundamental question, that's where higher-powered compute is necessary — especially since users want their responses just as fast, if not faster....

....MORE

• Chief AI Scientist at Meta, Yann LeCun: "I don't wanna say "I told you so", but I told you so."
• "OpenAI, Google and Anthropic Are Struggling to Build More Advanced AI"
• "OpenAI reportedly developing new strategies to deal with AI improvement slowdown"
• "Andreessen Horowitz Founders Notice A.I. Models Are Hitting a Ceiling" 

"Nvidia’s Earnings: What We Learned"

That the real treasure is the friends we make along the way?

From Barron's, November 20: 

Nvidia reported strong fiscal third quarter earnings late Wednesday and provided a revenue forecast for the January quarter that was slightly ahead of expectations.

Here's what we learned from the highly-anticipated report:

Stellar earnings. Nvidia reported October quarter adjusted earnings per share of 81 cents, compared to Wall Street’s consensus estimate of 75 cents, according to FactSet. Revenue came in at $35.1 billion, which was ahead the analyst expectations of $33.2 billion.

Decent guidance. The outlook was slightly above estimates. For the current quarter, Nvidia provided a revenue forecast range with a midpoint of $37.5 billion. That's above analysts' consensus of $37.1 billion.

Data center revenue doubled. Nvidia said that large cloud computing providers accounted for about 50% of its data center revenue in the quarter. The chip maker generated data center revenue of $30.8 billion in the October quarter, up 112% year over year.

Blackwell demand is off the charts. Nvidia management said it won't be able to meet all of the demand for its next generation Blackwell GPU from its customers. “Both Hopper and Blackwell systems have certain supply constraints, and the demand for Blackwell is expected to exceed supply for several quarters in fiscal 2026,” Nvidia's chief financial officer said Wednesday in a letter to investors.

AI model scaling goes on. CEO Jensen Huang says that worries about the pace of AI model improvements are overblown. “Pre training scaling is intact,” he said on Wednesday's conference call with analysts and investors when asked about the current state of AI. “The evidence is that it continues to scale.”....

....MORE

Barron's Nvidia live updates:

Nvidia Earnings: Why the Stock Is Down on Strong Results 

"Nvidia’s Forecast Magic Fades as Analysts Catch Up to Reality" (NVDA)

From Bloomberg November 21:

• More difficult for AI giant to impress after knockout quarters
• Sales forecast didn’t match more optimistic projections

Nvidia Corp.’s estimate-beating results would be the envy of most companies, but after a more than 800% share-price gain in two years, great is no longer good enough for Wall Street.

The main sticking point was the revenue forecast for the current quarter, which exceeded the analyst estimate by a mere $400 million. It marked the second-consecutive period that Nvidia’s quarterly sales projection didn’t top the average analyst estimate by $1 billion or more, suggesting that the hyper growth that has fueled its rally is rapidly fading.

While that didn’t exactly trigger the big stock swing that many were bracing for thanks to management’s assurances that demand for new Blackwell chips is “staggering,” it’s clearly going to be a lot harder to impress investors. The shares fell by around 3% in premarket trade on Thursday.

“The market has begun to understand that Nvidia won’t be able to deliver that kind of beat every quarter,” said Quincy Krosby, chief global strategist at LPL Financial. “You have to really shoot out the lights, give a real knockout, to see the kind of rallies we have seen in recent quarters.”

Even though there was an unusually large gap between the highest and lowest analyst estimates for fourth quarter sales, the fact that the average was relatively close to Nvidia’s forecast shows that after many quarters of wildly underestimating its financial performance, Wall Street has finally caught up....

....MUCH MORE

And more to come.

Most recently, November 19, intro and outro:

"Analysts update Nvidia stock price target ahead of earnings"
As has been the case for the last couple years, the reported quarter will be important but the guidance for the next report will be much more so....
****
....For what it's worth the stock has stopped at the $149-and-change level four times since November 7th (all-time high $149.77 on the 8th). If it fails to get through that in tomorrow's after-hours trading, and then hold it on Thursday I would expect hot money to go in search of other trades.

Daily highs:

Nov 14 - $149.00

Nov 13 - $149.33

Nov 12 - $149.65 

Nov 08 - $149.77

$147.01 up $6.86 (+4.89%) at today's regular session close, settling at $147.70 up $0.69 after-hours.

If I had to guess, and I'm only a marginally good guesser, I'd say beat-and-raise from the company and 'meh' from the market.The joys of the Keynesian Beauty Contest: trying to figure-out both the report and how the judges respond to the report.

In pre-market trade the stock is at $144.60 down $1.29 (-0.88%). Meh.

Capital Markets: "Ueda Lifts Yen, Leaving Euro and Sterling Pinned Near Lows"

From Marc Chandler at Bannockburn Global Forex:

Overview:  Escalating tensions in Europe and comments from Bank of Japan Ueda that spurred speculation of a December hike are the main drivers of the foreign exchange market today. The yen is the strongest of the G10 currencies, up about 0.65%, while the euro is the weakest, off a little more than 0.25%, and sterling is down almost as much. Most of the other G10 currencies are little changed. Led by central European currencies, most emerging market currencies are weaker today, including the Mexican peso. It was the weakest of the emerging market currencies yesterday and is off another 0.4% today.

Equities are weaker and bonds firmer. All the large bourses in Asia Pacific were lower but China, where a small gain was recorded. Europe's Stoxx 600 is off for the fifth consecutive session, the longest in two months. US index futures are lower, with the Nvidia's disappointment weighing on the NASDAQ futures, which about 0.50% lower. The S&P 500 has not fallen this week, but is down around 0.35%. Benchmark 10-year yields are a little lower, with German Bunds and UK Gilts setting the pace with around a three-basis point decline. The 10-year US Treasury yield also is about three basis points lower to 4.38%. Gold continues to recover. Recall that it had fallen six consecutive sessions until last weekend and has been up every day this week. It settled last week near $2563 and is now near $2670. January WTI is trading quietly inside yesterday's range (~$68.65-$70.00)....

....MUCH MORE

"Ford, facing economic headwinds and weak EV sales, to cut 4,000 jobs in Europe"

It is not easy building electric vehicles profitably.*

From the Associated Press, November 20:

Ford Motor Co. says it will reduce its workforce by 4,000 in Europe and the U.K. by the end of 2027, citing headwinds from the economy and pressure from increased competition and weaker than expected sales of electric cars.

Ford said Wednesday most of the job cuts would come in Germany and would be carried out in consultation with employee representatives.

Of the total, 2,900 jobs would be lost in Germany, 800 in Britain and 300 in other European Union countries. Ford has 28,000 employees in Europe, and 174,000 worldwide.

“The global auto industry continues to be in a period of significant disruption as it shifts to electrified mobility,” the company said in a statement. “The transformation is particularly intense in Europe where automakers face significant competitive and economic headwinds while also tackling a misalignment between CO2 regulations and consumer demand for electrified vehicles,” the statement said. 

In Europe, automakers must sell enough electric vehicles to meet new, lower limits for fleet average carbon dioxide emissions in 2025, and face a longer term 2035 EU goal of reducing emissions to zero, which would mean the elimination of most vehicles with internal combustion engines....

....MUCH MORE
*Here's December 8 2023's "Western Legacy Automakers Probably Won't Be Long-Term Survivors":

Because their current business is being mandated and legislated out of existence the Western marques, barring some serious breakthroughs in small-scale hydrogen or methanol, will have to pivot to EV's. 

And they won't be able to compete.

It almost appears that the gifting of the electric vehicle and solar industries to the Chinese was deliberate.....MUCH MORE

"COP29: Climate finance talks face 'hardest' stage as summit nears end-game"

If you take-away nothing else from our little blog take this:

Climate negotiations are always and everywhere a monetary phenomena.

Apologies to Milton Friedman's ghost for the re-purposing of the phrase.

From Reuters, November 20:

• Draft text set to drop later on Wednesday night
• Annual finance for poorer countries dominates talks
• Big gap in expectations from different country blocs

Climate negotiators were warned on Wednesday that the "hardest part" was about to start in talks over how much money should be provided to developing countries to help them adapt to climate-fuelled weather disasters and transition to cleaner energy.

 

Figuring out what form that funding takes, who pays and how much is central to the COP29 talks. With a notional Friday deadline looming, frustration over the lack of progress so far was starting to seep out of the negotiating rooms.

 

The chief negotiator of the COP29 summit's host Azerbaijan said "now the hardest part begins" ahead of a fresh text which is due to drop at midnight (2000 GMT) in the capital Baku.

 

Progress at the annual summit is typically marked through regular draft documents that get whittled down to a final deal.

 

Australia's environment minister Chris Bowen, tasked by the COP presidency with gathering the range of views in the negotiating rooms, said he had heard three proposals for the annual figure to be given by richer governments.

 

These were $900 billion, $600 billion and $440 billion, which compared with a previously announced starting point of $100 billion from the European Union.

 

EU climate commissioner Wopke Hoekstra said the bloc was not willing to talk about the figure until it had more structural details, adding: "Otherwise you will have a shopping basket with a price, but you don't know exactly what is in there".

 

Egypt's Minister of Environment, Yasmine Fouad, said countries had agreed not to treat the better off developing nations the same as richer ones when it came to paying in....

....MUCH MORE

Chief AI Scientist at Meta, Yann LeCun: "I don't wanna say "I told you so", but I told you so."

Via Threads, November 13:

yannlecun

6d
6 days ago

I don't wanna say "I told you so", but I told you so.
Quote: "Ilya Sutskever, co-founder of AI labs Safe Superintelligence (SSI) and OpenAI, told Reuters recently that results from scaling up pre-training - the phase of training an AI model that uses a vast amount of unlabeled data to understand language patterns and structures - have plateaued." ...reuters.com/techn…

***

itsmrmetaverse

6d
6 days ago

So just to be clear...
@yannlecun you're saying your boss just bet the house on something, you already knew was gonna fail?
Normally I would dismiss your predictions, because you're pretty much the Reverse-Cramer of Ai. (despite your contributions)
But you claim @ilyasu2 said this (who, contrary to yourself, actually is right a lot)
Sure wonder how @zuck and @cleoabram Feel about the biggest bet for @meta now...

The Mr. Metaverse poster, Aragorn Meulendijks, seems a bit of an arrogant dijk.

LeCun responded:

No. You misunderstand.
The following things are simultaneously, true:
1. LLM are very useful.
2. Training them will require increasing computing resources over the next few years.
3. But LLMs will *not* reach human-level intelligence.
4. New architectures are needed.
5. I've been saying this for many years, long before LLMs captured everyone's attention.
6. Meta-FAIR has been focusing on these new architectures for a while now.
7. Watch the Columbia Lecture if you want to know more.

THREAD

Here's the Reuters story LeCun linked to:

OpenAI and others seek new path to smarter AI as current methods hit limitations 

If interested see also:

• "OpenAI, Google and Anthropic Are Struggling to Build More Advanced AI"
• "OpenAI reportedly developing new strategies to deal with AI improvement slowdown"
• "Andreessen Horowitz Founders Notice A.I. Models Are Hitting a Ceiling" 

"Analysts update Nvidia stock price target ahead of earnings"

As has been the case for the last couple years, the reported quarter will be important but the guidance for the next report will be much more so.

From TheStreet.com, Nov 19, 2024 7:47 PM EST: 

This is what could happen next to Nvidia shares.

We'll know in a little while.

AI-chip colossus Nvidia  (NVDA)  is scheduled to report fiscal-third-quarter earnings on Nov. 20 and the whole tech world is watching.....

****

....Investment firms have been adjusting their price targets for Nvidia ahead of the company's quarterly results.

Truist raised the investment firm's price target on Nvidia to $167 from $148 and maintained a buy rating, according to The Fly.

The firm said that it expected Nvidia to post results above the analyst consensus while also expressing confidence in 2025 owing to a robust backlog. 

Nvidia's management commentary will focus on the next drivers of growth after large language models — data processing and physical AI — and Truist is raising its estimates based on higher growth expectations in the data-center end market. 

Its fiscal 2024 earnings per share view is up 4 cents to $2.85 and the fiscal 2025 view was raised 49 cents to $4.18, Truist said.

Large language models can perform a variety of tasks, including generating human-like content, analyzing data and improving customer experience.

Stifel raised its price target on Nvidia to $180 from $165 while maintaining a buy rating on the shares.....

....MUCH MORE

For what it's worth the stock has stopped at the $149-and-change level four times since November 7th (all-time high $149.77 on the 8th). If it fails to get through that in tomorrow's after-hours trading, and then hold it on Thursday I would expect hot money to go in search of other trades.  

Daily highs:

Nov 14 - $149.00

Nov 13 - $149.33

Nov 12 - $149.65 

Nov 08 - $149.77

$147.01 up $6.86 (+4.89%) at today's regular session close, settling at $147.70 up $0.69 after-hours.

If I had to guess, and I'm only a marginally good guesser, I'd say beat-and-raise from the company and 'meh' from the market.The joys of the Keynesian Beauty Contest: trying to figure-out both the report and how the judges respond to the report.

THIS Is THE Guy You Want In Charge Of Civil Defense

Holy Moly, he looks like he got up from the crypt to deliver his message:

Swedish Civil Defence minister Carl-Oskar Bohlin presents 'If the crisis or war comes' 

From The Express (U.S.), November 18:

WW3 panic as Sweden, Finland and Norway release new 'how to survive war' booklets
Nordic states are rolling out war-time guidance booklets, as fears of a global conflict spread.

....MUCH MORE

I would listen to him, every single word.

"Fed Rate Cuts to Spur $2 Trillion Money-Fund Exit, Apollo’s Slok Says"

From Bloomberg via Yahoo Finance, November 19:

The steady stampede into money-market funds is likely to reverse as the Federal Reserve keeps pushing down interest rates, giving investors incentive to shift cash into higher-yielding assets, according to Apollo Global Management’s chief economist Torsten Slok.

“Where will the $2 trillion added to money market accounts go now that the Fed is cutting,” Slok wrote in a note to clients on Tuesday, citing the inflow to money-market funds since the Fed began raising rates in March 2022.

“The most likely scenario is that money will leave money market accounts and flow into higher-yielding assets such as credit, including investment grade private credit.”

Slok, who warned of a such an exodus earlier this year, has stuck to his call even after investors keep piling in. The assets of such funds swelled last week to $7 trillion for the first time ever, defying speculation that investors would pull out cash once the Fed started nudging interest rates down from a more than two-decade high....

...MORE

Chasing yield, adding risk in the last six weeks of 2024 and into 2025.

As Mr. Seinfeld said, "Good luck with all that."

"The German army takes steps toward economic militarization"

 Three things up front:

1) The Ukraine/NATO/Russia situation is accelerating and is starting to get a real July 1914 vibe to it.

2) Turkey has seemed almost as supportive of Russia as it is of its NATO allies.

3) For now we are continuing to spell the country like the bird. Much as we love umlauts and diaeresis diacritics, typing the unicode ü in "Türkiye" is a pain.*

From Turkey's Harici.com.tr, 19.11.2024, 13:51:

In Germany, preparations appear to be underway for a potential conflict that could directly impact the Federal Republic much more than before. According to Frankfurter Allgemeine Zeitung (FAZ), the Bundeswehr has initiated training programs for companies based on the newly approved German Operational Plan. This classified strategy document reportedly spans 1,000 pages and outlines critical infrastructure and buildings deemed essential for military protection.

The report highlights plan to address a potential Russian threat, focusing on defense strategies and escalation scenarios. Among the measures discussed are steps to ensure the resilience of the civilian economy during crises.

Civil servants ‘train’ companies in Hamburg

One notable aspect of the strategy involves collaboration with businesses. A recent event hosted by the Hamburg Chamber of Commerce showcased this approach, where Lieutenant Colonel Jörn Plischke offered concrete recommendations.

“For every hundred employees, train at least five additional truck drivers that you do not need,” Plischke suggested, citing the high reliance on Eastern European drivers—70% of all trucks in Germany are driven by workers from this region. He raised concerns about a potential labor shortage should war break out in Eastern Europe.

Chamber of Commerce stresses ‘resilient economy’

The Bundeswehr advises businesses to create detailed crisis management plans, including assigning specific roles to employees. Self-sufficiency measures, such as installing diesel generators or wind turbines, are also recommended. The Bundeswehr has called for similar training events to be conducted nationwide, with implementation overseen by state commands.

Malte Heyne, General Manager of the Chamber of Commerce, emphasized the importance of these initiatives, stating:

“A well-prepared and resilient economy is essential for Germany’s civil and military defense.”

Greens propose special funding for armed forces

As early elections approach, debates surrounding Germany’s military spending are intensifying. Green Economy Minister Robert Habeck is advocating for a new “special fund” to bolster military capabilities before the elections, fearing that a two-thirds majority may be unattainable if the AfD and BSW gain more seats in the Bundestag....

....MUCH MORE

*Unicode Character "ü" (U+00FC)

The character ü (Latin Small Letter U With Diaeresis) is represented by the Unicode codepoint U+00FC. It is encoded in the Latin-1 Supplement block, which belongs to the Basic Multilingual Plane. It was added to Unicode in version 1.1 (June, 1993). It is HTML encoded as ü.

—https://unicodeplus.com/U+00FC

Mr. Victoria Nuland: "How the Ukraine Counteroffensive Can Still Succeed"

It's a bit concerning that we are counting on Vladimir Putin of all people to be the sane one in this situation.

Sixteen months ago this is what was being passed off as high-level analysis.

I'm being facetious with the "Mr. Nuland" bit. Although his wife is the more notorious and more powerful member of the marriage, Robert Kagan is a warmongering neocon in his own right.

He and his two co-authors write under the imprimatur of the Institute for the Study of War and here at TIME. By-the-bye the ISW was founded and is run by his sister,  Kimberly Kagan.

This piece looks to be around seven thousand words. It almost reads as if the writers think war is a giant board game.

From TIME Magazine, August 3, 2023:

The situation in Ukraine still favors Kyiv despite the limited progress made in the counteroffensive so far. Ukrainian forces attempted a limited mechanized penetration of prepared Russian defenses in the south in early to mid-June, but failed to break through the Russian lines. They then switched to slower and more careful operations while disrupting Russian rear areas with long-range precision strikes. Ukraine began the next, reportedly main, phase of its counteroffensive on July 26 with a determined drive to penetrate Russian lines in western Zaporizhia Oblast. It’s far too soon to evaluate the outcome of that effort, which is underway as of the time of this writing, but it is vital to manage expectations. Ukrainian forces are fighting now to break through the first line of long-prepared Russian defenses. Several lines lie behind it, stretching for many miles. Ukrainian progress will very likely alternate periods of notable tactical advances with periods, possibly long periods, of pause and some setbacks. Much as we might hope that the road to the Sea of Azov will simply open for Ukrainian forces the odds are high that fighting will remain hard, casualties high, and frustration will be a constant companion. All of which is normal in war.

But the Ukrainian counteroffensive can succeed in any of several ways. First, the current Ukrainian mechanized breakthrough could succeed, and the Ukrainians could exploit it deeply enough to unhinge part or all of the Russian lines. Second, Russian forces, already suffering serious morale and other systemic problems, could break under the pressure and begin to withdraw in a controlled or uncontrolled fashion. Third, a steady pressure and interdiction campaign supported by major efforts such as the one now underway can generate gaps in the Russian lines that Ukrainian forces can exploit at first locally, but then for deeper penetrations. The first and second possibilities are relatively unlikely but possible.

The third is the most probable path to Ukrainian success. It will be slower and more gradual than the other two—and slower than Ukraine’s Western backers desire and expect. It depends on the West providing Ukraine with a constant flow of equipment likely over many months so that Ukraine can maintain its pressure until the Russian forces offer the kinds of frontline cracks the Ukrainians can exploit. It is not primarily a matter of attrition. The slow pace of the pressure campaign Ukraine had been using before July 26 is designed to minimize Ukrainian losses. It is not primarily oriented towards attriting Russians either, but rather towards steadily forcing the Russians out of their prepared defensive positions in ways that the Ukrainians can take advantage of to make operationally significant advances. It is still maneuver warfare rather than attritional warfare, just at a slower pace. It therefore requires patience, but it can succeed.

The Ukrainians have been successful with such an approach both in Kherson and in the Kharkiv counteroffensive. The rapid collapse of Russian positions around Kharkiv in October 2022 was the result of months of steady Ukrainian pressure on the ground and in the rear. Ukrainian forces stopped determined Russian advances around Izyum in southeastern Kharkiv Oblast and then launched their own limited counterattacks in mid-September 2022. They targeted Russian logistics hubs and concentration areas behind the front lines for months before launching their decisive effort. That effort caught the Russians by surprise, leading to the sudden collapse of Russian defenses and rapid, dramatic Ukrainian gains. A similar approach in Kherson did not achieve surprise and so did not generate such a large-scale rapid Russian collapse, but it still liberated a large and heavily defended area. A similar approach in southern Ukraine now can offer similar prospects for success.

Ukraine has reportedly committed the main body of the forces it had prepared for counteroffensive operations, although it is not clear what proportion of those forces are actively engaged in combat. Ukraine retains the initiative and benefits from the many advantages discussed below. Its counteroffensive could nevertheless fail. The Russians might prove more resilient than they seem. The Ukrainians might be unable to develop the tactical skills they need to overcome well-prepared Russian defenses. The West might fall short of providing Ukraine the equipment and support it needs in time. The last is the only thing fully under the West’s control. As long as Ukraine still has a serious prospect of liberating strategically vital areas, which it still does, the West’s task is to ensure that Ukraine has what it needs to succeed.

Russia’s Problems

Reasons for confidence in the possibility of significant Ukrainian successes are closely tied to a number of fundamental challenges inherent to the Russian position in Ukraine and the Russian military. These cannot be resolved in 2023, so the opportunities they offer Ukraine are not fleeting. At the strategic level, the geometry of the theater favors Ukraine. At the strategic and operational levels, the lack of Russian reserves forces difficult and complex choices on the Russian military command in the face of Ukrainian counteroffensives. And at the tactical level the way the Russians are conducting defensive operations puts much greater pressure on Russian combat units than the lack of regular or large-scale movements on the map would suggest. All these problems are exacerbated by fundamental flaws in the Russian military itself.

Theater Geometry

The defining characteristic of this phase of the war is that the Russians must defend a ground line of communication (GLOC) consisting of a road and a rail line that runs from Rostov-on-Don at the northeastern edge of the Sea of Azov to Crimea. Vast quantities of food, fuel, ammunition, personnel, and other supplies are required by the tens of thousands of Russian troops in southern Ukraine and must travel along this road and rail line. The Russians were already relying on (and dependent on) this GLOC to supply their troops in southern Ukraine before the most recent break in the Kerch Strait Bridge, because Russian President Vladimir Putin had ordered Russian forces not to rely on the bridge for their logistics after the last major attack on the bridge. The break in that road bridge deprives the Russians of any fallback if the Ukrainians can threaten or cut the Rostov-to-Crimea GLOC.

This state of affairs favors Ukraine in an important way. If the Ukrainians can reach the Sea of Azov anywhere and hold their positions, they will have cut the GLOC. The Russians, thus, have to hold the entire thing. Put another way, the Ukrainians only have to win and hold in one sector to render virtually all the Russian-held territory west of their advance untenable. The Russians have to win everywhere all the time. The Ukrainians don’t even have to make it all the way to the water. The GLOC does not hug the coast all the way, for one thing, and is thus closer to the current front lines in some areas than the shoreline. If the Ukrainians can push to within artillery range of the GLOC (about 25 kilometers), moreover, they can begin to shell it intensively in a way that would badly degrade the Russians’ ability to continue to use it. The Ukrainians are thus free to choose any sector of the line or take advantage of any hole that opens anywhere in the line, to push to cut the GLOC in a way very likely to collapse the Russian defenses west of that break. The Russians cannot allow any such holes to appear.

Reserves

The Russians suffer from an additional challenge in that they lack operational or strategic reserves. Reserves are uncommitted combat forces able to respond to developing situations in the battlespace. They can be used to take advantage of opportunities such as to break through the lines during an offensive operation or to handle emergencies, for example by rushing in to close a gap in friendly lines before the enemy can exploit it. Reserves are essential in mechanized maneuver war when the combatants can break through each others’ lines and then exploit those breakthroughs to make large-scale and rapid advances. Reserves can play a different role in protracted war, whether attritional or to simply slow maneuver, because the frontline troops in such a conflict become exhausted over time. Reserves can then rotate onto the frontlines to allow the exhausted troops there to move to safer areas in the rear, rest, receive replacements and new equipment, and prepare to take their turns again on the front lines. A military without significant reserves has to require its troops on the frontlines to stay there indefinitely and can temporarily generate the effects of reserves only by pulling forces from one sector of the line to another to deal with unexpected opportunities or reverses. This is exactly the situation the Russians find themselves in now, and the Russian force generation apparatus is currently incapable of bringing up quality reserves to fulfill these roles fast enough.

Lack of dramatic advances or withdrawals does not mean lack of action, still less stalemate. Ukrainian forces continue to press Russian defenders all along the lines with combinations of artillery strikes and ground combat. The Russian defenders are tiring—and complaining about it publicly. It is clear that Russian Armed Forces Chief of Staff Army General Valery Gerasimov, who is also the overall theater commander for Ukraine, has established a policy that seriously limits troop rotations across the theater. One Russian senior commander resigned or was fired over the issue. Russian soldiers or their families periodically release videos complaining about the lack of rotations. Russian milbloggers constantly express concern about the problem. These indicators clearly suggest that Gerasimov’s policy is largely pinning the same Russian forces on active front lines for a long time, forcing them to continue to receive Ukrainian artillery strikes and ground attacks for weeks or months without rest. Since the nature of the Russian defense requires considerable activity of the defenders, as we will consider below, the burden on soldiers required to execute that defense continuously for a long time is wearing....

....MUCH MORE

Possibly also of interest, posted three weeks before Russia's invasion of Ukraine:

Ukraine: NeoCons Nuland and Kagan; A Family Business of Perpetual War

This piece is seven years old but evergreen. The warmongers are back in the news, Kagan because he is pitching civil war in the U.S. and Nuland because there are some loose ends (secrets to bury) in Ukraine, dating back to the 2014 coup and some serious skullduggery before and after. Looking from the outside-in, it appears Nuland has some regime change planned for Belarus as well. And then maybe Poland.

Polish politics is such a thorn in the EU's (and NATO's) side that a change of government may be the neocon's only solution for getting what they want. Which would be hilarious if it weren't so serious; Stalin ran into the same thing trying to install communism. Unlike East Germany which took to it quite easily, to the point that many of the old people still have Ostalgie (East-Nostalgie). 

Stalin got so frustrated that he said trying to impose communism on Poland was like putting a saddle on a cow [NYT August 1989, some have him saying the same thing about Germany but I know of no ref.] Similar sentiments in Brussels, I'm sure.

From the now-deceased Robert Parry, writing at Consortium News, March 20, 2015, i.e. a year after the Maidan coup:....

And:

Sunday, November 14, 2021
Russia—Ukraine+USA: It's Probably Nothing (plus Ozzy)
Anybody know where Nuland and Kagan are?
Via the Twitter box: 

Friday, January 14, 2022
"White House: Russia prepping pretext for Ukraine invasion"

Dear General Milley,

Counterattack if you must but DO NOT take the Paris - Borodino route.

The off-season discount seems attractive but really it's,

Bad, bad, no good, very bad.

Yr. Pal, 

Lil Boney

p.s. Is Victoria Nuland still married to that Kagan guy?
She hot, in a Harpy/Valkyrie sort of way
—N.Bonaparte

 

July 2022

"Ukraine peace talks in the cards?"

The writer of this piece, M.K Bhadrakumar is more pro-Russian than he appears in this blog post and we've only linked to him once before -Vatican Frontruns The Rest Of Europe To Buy Russian Gas. However, at this moment seeing the world through the lens of his former life in the Indian Foreign Service might bring more value to the reader than tuning in to Fox or CNN or hanging out with the warmongers at the Nuland/Kagan Institute for the Study of War....

And dozens of posts on Ms. Nuland solo.