Is AI a 'Super Sell'?
Of the entire GDP gain for last year — $174 billion — fully three quarters of it were from capital investment in the AI/high tech industry. Take it away...and most of the ‘growth’ vanishes.
Tuesday, November 18th, 2025
Bill Bonner, from Baltimore, Maryland
Wall Street still bubbling along...but Main Street turning sour.
MarketWatch:
More Americans are losing their homes, as foreclosures jump 20%. What’s driving it.
On top of surging homeowners-insurance premiums, property taxes are also pushing up people’s costs and putting pressure on their ability to cover basic expenses.
Apparently, many people are ready to pull up stakes. Gallup:
One in five Americans say they want to leave the US permanently, according to Gallup, a figure that’s on par with last year’s record regardless of the shift of power in Washington. Women and girls ages 15-44 are driving the trend, and have increasingly expressed the desire to move from the US to another country — 40% said so in the most recent poll.
Not changing the subject, the flaw in central planning, revealed in Friedrich Hayek’s landmark book, “The Fatal Conceit,” was that the planners could never have enough information. They don’t know that Ms. Jones prefers yellow bloomers...or Mr. Smith buys Palantir stock...or that the lower field on Mr. Johnson’s farm is too wet to plant wheat. A real economy, Hayek pointed out, consists of millions of decisions based on ‘dispersed knowledge,’ not on centralized knowledge.
Governments can still plan and control...but not successfully.
But along comes Alex Karp. Mr. Karp is much in the news. And not because he looks like he just stuck his wet fingers into an electrical outlet. He also proposes to solve Hayek’s problem...by bringing ALL knowledge to the feds. Everything that is available on the internet, that is...which may or may not include the color of Ms. Jones’ knickers. What he won’t miss is Mr. Jones’ political inclinations. For whom does he vote? What is he reading? What does he think? Could he be a malcontent? A dissident? A terrorist?
Karp has it covered — surveillance on a scale and with such detail...that Stalin’s secret police chief, Lavrentiy Beria, could never have imagined.
The feds — and private businesses too — will pay a lot for that kind of intel. So, Mr. Karp’s stock — Palantir — is flying high. The stock has more than doubled this year. It’s up more than 2,000% over the last three years. And its fans are more bullish than ever.
One giddy analyst, Tom Nash, says he expects the stock to go to $1,000...with “$500 [it’s now $172] the lowest the stock can be in 5 years.” That $1,000 price would make the company worth about $2.3 trillion. A prediction: investors will wait ‘til hell freezes over for that to pay off.
Already, Palantir has a P/E ratio over 400. That’s ten times as high as Apple’s P/E. And as we saw yesterday, Buffett considers Apple a sell, not a buy.
Is Palantir, then, a ‘super-sell?’
Maybe.
Karp says last quarter’s earnings were:
“Arguably the best results that any software company has ever delivered...[Palantir] is one of the greatest businesses in the world...doing a noble task.”
“It’s the most baller, interesting company on the planet...with a baller product...and a baller culture.”
[We think ‘baller’ means ‘cool.’]
If the nobility of keeping tabs on everyone isn’t clear to you, Karp spells it out:
”It’s either going to go right and wrong for us or it’s going to go right and wrong for China.”
“When people are worried about surveillance, of course, there are huge dangers there, but you know, you will have far fewer rights if America’s not in the lead.”
That sentence needs clarification. But the more you try to make sense of it, the daffier it becomes. Will Americans lose their rights if China leads in Olympic medals…in auto production…in drone tech? Whatever it is, why the need for more surveillance in the US? Karp is just ‘talking his book;’ surveillance is his stock in trade.
And the ‘fatal conceit’ may be contagious; Mr. Karp should have worn a mask.
Karp also notes that “most of the GDP growth in the country is because of AI.” Of the entire GDP gain for last year — $174 billion — fully three quarters of it were from capital investment in the AI/high tech industry. Take it away...and most of the ‘growth’ vanishes.
And in the stock market — the same thing; take out the leading techs and you cut this year’s stock market gains in half.
In other words, both the stock market and GDP now depend on illusions, hype, and Karpian BS.
Regards,
Bill Bonner
Research Note, by Dan Denning
Have US companies over-invested in ‘compute’? What if Chinese AI models are better and faster than US models? How many trillions in market value would be wiped out of the major US companies (US stocks have gained over $30 trillion in market value since the Biden Administration banned the export of Nvidia GPUs to China in August of 2022).
Depending on the answers to the questions above, hundreds of billions of investment in chips and data centers in the US may suddenly be due for a write down. Why?
It comes down to ‘inference speed.’ It basic terms, it’s how fast an AI model produces an ‘answer’ once you’ve given it a prompt. Once you’ve ‘trained’ the model (which the US companies have invested heavily in, and which is costly), the AI models spends 90% of its time ‘doing work’ and answering questions from users.
If the open-source Chinese AI models are doing that work faster, cheaper, and better (or just as good) as the pay-to-play US AI models…how long will it be before paying customers in the US flee to the Chinese models? What then what is the risk of a major downward adjustment in the earnings expectations (and valuations) of US AI companies? How much of the $30 trillion in market value added on since 2022 is at risk? More on this for paid subscribers on Friday.