THE CRUNCH
High-frequency trading firms, long obsessed with shaving microseconds off trades, are now racing each other for AI computing power. Bloomberg reports that the biggest players, including Jane Street and Hudson River Trading, are spending billions on cloud contracts, chip startups and their own data centres, driven by a growing reliance on machine learning to predict market moves. One executive estimates compute spending is now ten to twenty times higher than before ChatGPT launched.
The strategies differ. XTX Markets is building a data centre in Finland, while Jane Street runs one in Texas packed with more than 4,000 Nvidia GPUs. Hudson River Trading spends $1 billion a year on AI, according to its AI chief Iain Dunning, and has signed a multiyear deal with cloud provider CoreWeave.
Jane Street went further still: it invested $1 billion directly in CoreWeave, committed $6 billion to its computing services, and led a funding round for chip startup Etched, becoming the first customer for its AI chip, which is designed to deliver more performance by running at a lower voltage.
Bloomberg reports the industry sees rising costs and fast-ageing chips as genuine risks. But Jan Boomaars, chief executive of Amsterdam-based high-frequency trader Optiver, argues that doing nothing is the more dangerous option.