Moore Threads takes aim at Nvidia’s H200

Friday’s rally in technology stocks came as a much-needed relief for global financial markets and was sparked by a single, straightforward piece of news: Oracle will host TikTok’s US user data under a new US–China arrangement that allows the app to continue operating in the United States. The deal is yet to be approved.

But if it does, under the deal, Oracle will store and secure US user data on its cloud infrastructure and help oversee cybersecurity and algorithm-safety measures. It is a big responsibility given that roughly half of the US population uses TikTok. In return, Oracle is expected to take a meaningful equity stake of around 15% in the newly structured US TikTok business, while the broader investor consortium secures majority control. But above all, Oracle gains – with this deal - a strategic foothold in a high-growth digital platform via its cloud services — and that’s a golden narrative for its growth profile.

Oracle shares rebounded more than 6% on Friday, after having fallen over 45% from their September peak. The rally spread across the broader AI and tech complex, as investors reassessed the monetisation potential of data-centre infrastructure and computing power. Nvidia rose nearly 4%, while the Nasdaq gained 1.3%, reclaiming its 50-day moving average.

That said, the pressure on tech stocks is unlikely to be over. First, the TikTok deal remains modest relative to the scale of Oracle’s business, its heavy debt load and ongoing investment needs. On its own, it is unlikely to reverse the recent deterioration in appetite for leveraged debt, nor does it fully answer the question of how revenues will grow fast enough to justify rising leverage and capital spending.

Second, developments in China highlight how quickly competitive dynamics can shift. Chinese chipmaker Moore Threads, founded by a former Nvidia executive and recently listed, announced plans to release new AI chips aimed at competing with Nvidia’s Hopper-generation products. The company claims its upcoming chips rival Nvidia’s H20 and H200, and narrow the gap with the Nvidia’s next-generation Blackwell platform. This is an important development in the context of the US–China chip war.

Only weeks ago, Nvidia received approval to resume sales of its H200 chips to China, at a time when those chips were widely seen as being well ahead of domestic Chinese alternatives. Moore Threads now says it could begin producing these chips as early as next year and claims energy-efficiency gains of up to 10× versus its own previous GPU generation. If realised, this would reduce Chinese buyers’ dependence on Nvidia hardware — particularly as Beijing weighs how much to encourage domestic alternatives. The closer Chinese chips move toward US peers in performance and efficiency, the stronger the incentive for state support.

Still, several red flags remain. First, designing advanced chips is one challenge; manufacturing them at scale is another. Moore Threads cannot go to TSMC after being placed on the US Entity List in 2023, meaning it must turn to domestic foundries. SMIC, China’s leading chip manufacturer, has the capability to produce such chips using the country’s most advanced available processes, but those technologies remain one to two generations behind TSMC, implying potential limits on performance, yields and efficiency. Second, much of the AI ecosystem is built around Nvidia’s software stack, and switching to Moore Threads’ platform would involve transition costs, integration challenges and reliability risks that are yet to be fully tested.

Nevertheless, if Beijing decides this is the strategic path forward, Chinese companies may ultimately have little choice but to adapt. On Monday, Moore Threads shares rose 1.9% in Shanghai, while SMIC gained more than 6% in Hong Kong.

The broader message is clear: China has not said its last word in the global tech race.

Elsewhere in Asia, tech-heavy indices started the week higher. South Korea’s Kospi gained more than 2%, while Japan’s Nikkei initially advanced before giving back gains amid a sharp sell-off in Japanese government bonds that briefly pushed the 10-year yield to 2.10%. The USDJPY retreated as Japanese officials warned that positioning against the yen remains heavy and one-sided, reviving the risk of intervention — even if such action would not necessarily reverse the broader trend.

The yen’s strength weighed on the US dollar, while gold surged to a fresh all-time high above $4’400 per ounce, supported by rising geopolitical tensions involving the US and Venezuela. Oil prices also moved higher, with WTI crude above $57pb and Brent clearing $60pb, though the move may prove short-lived.

Looking ahead, the week will be shortened by the Christmas holiday in Western markets. Before liquidity fades, the US will release its latest GDP update, expected to confirm 3.2% growth in Q3, alongside signs that price pressures may have firmed.

After that, markets are likely to slow as investors head into year-end mode.