Carmen Li was a young options trader in Chicago when she emailed the founder of her firm a trade idea. Don Wilson of DRW wrote back with questions she hadn't thought of. Years later, a half-hour chat with him at a futures conference led to a company. Now Li, 40, wants Wall Street to trade the rent on Nvidia chips the way it trades oil.
Li set up Silicon Data in April 2024 with $1 million from Wilson. It builds price indexes for renting Nvidia (NVDA) chips, using rental records from more than 40 sources. CME Group (CME) plans two futures contracts on those indexes. Each one is a month of rent on an Nvidia chip, the H100 or the B200. The biggest AI developers, Google among them, are racing to lock up computing power. Li says futures would let them hedge a huge cost. To hedge is to protect yourself against a price swing. “The goal of Silicon Data is to become a referee,” she told the Journal's Peter Rudegeair and Candice Choi.
What a futures contract is
A futures contract is a deal you make now on a price later. A farmer can lock in what she'll get for her corn at harvest. A cereal maker can lock in what it'll pay. Each side gives up the chance of a better price to get rid of the worry. These contracts would reach up to three years out. They'd settle in cash, so nobody hands over any computing power. That also means traders who never rent a chip could bet on the price going up or down.
The regulator isn't sold yet. CME pushed back an Oct. 5 launch after the Commodity Futures Trading Commission added 45 days to its review. The agency has flagged the risk that a few big players could push prices around. It also noted that rents vary a lot by provider and region. Skeptics point to internet bandwidth futures from the dot-com years. Those failed when a glut of fiber-optic cable crushed prices. A rival, Ornn, is working with Intercontinental Exchange on similar contracts. One of its co-founders is 23.
Our read
This is an Investments/Risk IN04 story with a Career lesson tucked inside. The career part is simple. Li sent the boss a trade idea, then kept in touch for years. A half-hour talk turned into a company. The money part is about what a futures market is for. It's a tool for companies with a real cost to manage. For a saver, a bet on chip rent is a bet on a price with a short record. The regulator has said out loud it has doubts. CME Group is held at weight in 6 books and Nvidia in 31. Nothing added. Our verdict is watch.
Here's where it touches your own money. Several firms have filed to launch funds that track the price of AI computing power. If one shows up in your brokerage app, read what it holds before you read its returns. A fund built on these contracts would own bets on rent, settled in cash. It might not own a single chip. The check for this week is closer to home. Open the fact sheet of any commodity or theme fund you already own and search for the word futures. If it's there, the fund owns contracts on a price, and maybe none of the thing itself. Buy the umbrella while the sky is clear. If the answer surprises you, bring the sheet to a review.