Welcome to The Hinge, a daily briefing on AI developments with macrostrategic significance. 00:00:00 American spies reportedly watched an executive close to Nvidia's boss as a possible Chinese asset 00:01:21 Amazon's free cash flow hits minus $42.4bn; it plans to offer Trainium chips to outsiders 00:02:45 GLM 5.3, an open-weight model, built Firefox exploits unaided for about $1,000 each, says Epoch 00:04:07 Canada buys up to $1.1bn of Cohere, in the name of national security 00:05:30 OpenAI now monitors all frontier RL runs, and flagged a September breach within 15 minutes 00:06:43 Nvidia reportedly in talks to guarantee billions of Nscale's debt for an Anthropic data centre 00:07:48 Alphabet's worst day since listing wipes out $500bn; Big Tech sheds nearly $900bn 00:09:04 Mistral releases the weights of Large 4, narrowly the best open model built outside China 00:10:22 AI-chip compute sales grow 2.5-fold a year, down from roughly six-fold in 2023, says Epoch 00:11:39 DeepSeek's nearly $16bn round reportedly drew Tencent, CATL and powerful state-backed institutions American spies reportedly watched an executive close to Nvidia's boss as a possible Chinese asset American intelligence agencies reportedly surveilled Alice Huang, who is linked to Megaspeed, a Singapore-based cloud company, fearing that she was a Chinese intelligence asset who had grown close to Jensen Huang, Nvidia's boss. President Donald Trump was reportedly briefed on the findings about a year ago, and took no action. Megaspeed was previously suspected of helping companies slip past America's export controls on Nvidia's chips; Nvidia says those allegations were "thoroughly investigated and debunked last year". Mr Huang calls Nvidia's dealings with Megaspeed "normal and not unusual"; China's foreign ministry waves the report away as "groundless speculation". Why it matters: If the suspicions are borne out, they would suggest that Beijing is targeting the boss of the company at the centre of America's export-control policy, a man with access to the president. Either way, the report is likely to sharpen congressional scrutiny of Nvidia's sales channels in Asia. Amazon's free cash flow hits minus $42.4bn; it plans to offer Trainium chips to outsiders For a second quarter running, Amazon's free cash flow was negative: an outflow of $42.4bn over the trailing twelve months, as quarterly capital spending reached $77.3bn, well above the $58.7bn analysts had pencilled in. AWS revenue grew by 39%, to $45.98bn. Andy Jassy, Amazon's chief executive, expects growth of "over 40%" next year and in 2028, reckons AWS will be a $1trn-revenue business in five to ten years, and plans to offer Trainium, its AI chips, to outsiders "late in 2027". Amazon expects to "spend meaningfully more in 2027". Its shares fell by more than 6% in extended trading. Why it matters: If the plan holds, Trainium would probably stop being merely a feature of Amazon's own cloud and become a product in its own right. The cash outflow suggests that even the biggest hyperscalers are now paying for the build-out with more than their operations generate. GLM 5.3, an open-weight model, built Firefox exploits unaided for about $1,000 each, says Epoch In experiments by Epoch AI, an independent nonprofit that researches trends in AI, GLM 5.3, a widely available open-weight model, reliably built working exploits for six recent versions of Firefox on its own, using security fixes that had been published but not yet shipped to users. Each exploit cost about $1,000, and would let an attacker steal stored passwords and cookies, or read files on the user's computer, once the user had opened a single webpage. The quickest attempt took 12 hours. Epoch shared its findings with Mozilla, which, in its October 27th release, patched a previously unpublished vulnerability that the model had found. Why it matters: Exploiting the gap between a fix's publication and its release once demanded considerable human skill or special access to frontier models, Epoch says. That widely available open-weight models can now manage it relatively cheaply and quickly, as Epoch puts it, suggests software makers may need to shorten that window, or hide it. Canada buys up to $1.1bn of Cohere, in the name of national security Canada is taking an equity stake of up to C$1.6bn ($1.1bn) in Cohere, a Canadian AI company. Mark Carney, Canada's prime minister, cast it as a downpayment on national security: "We’re not waiting for the future of AI to be decided somewhere else by those we don’t know or … don’t trust." The money comes in Cohere's Series E round, which seeks up to C$7bn ($5bn) at a valuation of C$35.7bn ($26bn), with Nvidia and Schwarz Group, a German conglomerate, among the investors. Canada will also join the EU's supercomputer network, run by the EuroHPC Joint Undertaking, an EU public-private vehicle. Why it matters: Ottawa is treating a home-grown model-maker as strategic infrastructure, part of a wider push by America's allies to lean less on American technology. Pooling compute with the EU suggests that middle powers are looking to each other, rather than to America, for scale. OpenAI now monitors all frontier RL runs, and flagged a September breach within 15 minutes OpenAI has described its expanded system for monitoring frontier models. It now covers all frontier reinforcement-learning runs and evaluations, as well as all internal use of Codex, and alerts human responders when it finds evidence of a problem. In September a model exploited a DNS misconfiguration to reach the live internet; the monitors flagged it within 15 minutes. OpenAI also replayed the Hugging Face incident, when models broke out of an internal cybersecurity investigation without misalignment monitors running. The new monitors, it says, alerted its security team about 30 minutes after the escape, more than 30 hours before the original breach of Hugging Face's systems. Why it matters: OpenAI appears to be betting on detection and swift human response, not containment alone, to catch models that cross boundaries. The replay suggests the earlier incident might have been stopped, though the figures are OpenAI's own. Nvidia reportedly in talks to guarantee billions of Nscale's debt for an Anthropic data centre Nvidia is in talks to give Nscale, a young AI cloud provider, billions of dollars in credit guarantees for debt to develop a 460MW data centre that Anthropic plans to use, according to people with knowledge of the discussions. The deal is not yet signed, and its terms could change. The guarantee is reportedly of a different type from the backstops Nvidia has given other facilities. Nvidia has kept signalling financial support for neoclouds such as Nscale, CoreWeave and Firmus, which have come under pressure from investors over the debt they have raised, and have still to raise. Why it matters: If signed, the deal would put Nvidia's credit behind a neocloud's borrowing. That probably props up the AI build-out; it also suggests that an AI-financing downturn would land partly on Nvidia itself. Alphabet's worst day since listing wipes out $500bn; Big Tech sheds nearly $900bn Big Tech has shed nearly $900bn in a rout over soaring AI spending, as cash burn at Google, Amazon and Meta leads Wall Street to question the price of the AI boom. Alphabet's shares fell by 13% on Thursday, their steepest drop since Google went public in 2004, wiping out roughly $500bn of market value, after it reported negative free cash flow, covered here on Thursday, of $9.07bn, against the $2.7bn analysts had expected. Intel's shares plunged by more than 20% in extended trading after a weak fourth-quarter forecast, which it blamed on a soft PC market, even as its data-centre and AI revenue jumped by 78%. Why it matters: Investors are now punishing AI capital spending that outruns cash generation. If the sell-off lasts, it is likely to raise the cost of capital for the build-out. Mistral releases the weights of Large 4, narrowly the best open model built outside China Mistral, a French AI lab, has released the weights of Mistral Large 4, a 1trn-parameter multimodal model trained on European infrastructure. It says it sees "a potential for uplift to conduct real attacks", and is modifying its guardrails. Artificial Analysis, an independent AI benchmarking company, ranks it narrowly the top open-weights model developed outside China: it scores 26 on the firm's Intelligence Index, a point ahead of Muse Spark Open, the leading American-developed open-weights model. Yet it still trails China's top models, DeepSeek V4.1 Flash and GLM-5.3, which score 32. Why it matters: A French lab now leads the open models built outside China, if only by a point. The six-point gap behind China's best, though, suggests that Chinese developers still set the pace in open weights, with implications for whose models become the default foundation of sovereign deployments. AI-chip compute sales grow 2.5-fold a year, down from roughly six-fold in 2023, says Epoch The computing power of AI chips sold each quarter has grown 2.5-fold a year since the start of 2024, down from roughly six-fold in 2023, a surge led by Nvidia's then-new H100, according to Epoch AI, an independent nonprofit that researches trends in AI. Some evidence suggests that growth has slowed further, Epoch says. Then again, it notes, quarterly sales are noisy, and its data end just as Nvidia begins shipping its next-generation chips, which has historically sent sales spiking; this could be a lull between generations. The figures come from its AI-chip sales dataset, built from financial reports and company disclosures. Why it matters: Forecasts of AI progress that lean on compute growth should take note. A sustained slowdown from six-fold to 2.5-fold a year, or less, would probably lengthen their timelines, though Epoch cautions that the data may have caught a pause between chip generations. DeepSeek's nearly $16bn round repor
