Wall Street HFTs Bet on AI Computing

High-frequency trading firms are ramping up their investments to secure AI computing power. Between data centers, multi-year contracts, and equity stakes, the announced amounts reach a billion dollars and more, as the sector faces a significant rise in costs and rapid chip obsolescence.

Rising Costs and Chip Obsolescence Reported

The high-frequency trading industry views rising costs and accelerated chip aging as significant risks. For Jan Boomaars, who leads Optiver, not investing in AI would pose an even greater danger. An industry executive reports that the amounts allocated to computing are now ten to twenty times higher than before the arrival of ChatGPT.

Dedicated Data Centers at XTX and Jane Street

XTX Markets is building a data center in Finland, while Jane Street operates a site in Texas equipped with over 4,000 Nvidia GPUs. Several high-frequency trading firms are thus seeking to enhance their access to AI computing power, with their reliance on machine learning to anticipate market movements intensifying.

CoreWeave Contracts and Bet on Etched Chip

Hudson River Trading has signed a multi-year contract with CoreWeave and, according to its AI head Iain Dunning, is dedicating $1 billion per year to AI. Jane Street has invested $1 billion in CoreWeave and plans to allocate $6 billion to its computing services. The company has also led a funding round for the chip startup Etched, becoming its first customer; the AI chip developed by Etched is touted as more efficient due to a reduced operating voltage. More broadly, major players in the sector are committing several billion to cloud contracts, startups, and their own data center infrastructures.