By almost any metric you use, stocks are near the highest levels ever – once again on the 10th floor or higher. They could go up, of course. And maybe AI could power a whole new economic boom.
Reminds Me of the time I was placer mining . The saying back then was -how to make a little money? Take a big pile of money. Much to what You have just stated.
I believe AI is real and beneficial. The problem is that the swindlers and the government only go after projects where money can be hidden and spread about the expense of everything else. They are most certainly not in favor of something that may be smarter than they are or that could tell them what they are doing is wrong. It will be used at our expense for a while, then they will move onto the next white elephant. Unlike human beings, AI can be and is trained to learn from its mistakes. As we are seeing over in Ukraine and Iran, cheap drones are winning wars. It is not AK-47's anymore. How come nobody is talking about where these drones are coming from, who provided them or the technology to our enemy. People should buckle up, because if they are worried about gas prices, that is only the tip of the iceberg. Our so called NATO allies think they can sit this out, but they are going to be right in the middle of it. If Russia decides to drop a bomb on Kiev, and we drop one on Tehran, it is going to be show time, and $5 gas is going to be the last think you are going to have to worry about. Sorry about that!
Excellent column. Both Bill and Dan. I suspect that AI investment is well overdue for a correction. The dependence for funding is solved by investment but the need for power and cooling water remains. The politicians have taken note, the physics stubbornly resist the pull of investors emotion and all of it is due for a sudden correction - a reality check.
Another possibility is that the big operators and expensive Nvidia chips and data centres become obsolete and companies buy cheaper server type setups and run localised AI and so keep their data private and lower their costs.
There are large wafer semi's, 208V chips and materials like graphene (it's coming!) once developed for production can actually run semiconductors faster and cooler...
Agreed. In fact, there is an article to that in today’s Wall Street Journal. An “AI” within a given organization’s data records is probably cheaper, more effective and less likely to have been tampered with or selectively filtered.
I like the current administration. It reminds me of a guy falling out of a ten-story building saying, “So far, so good.”
That’s the whole economy, right? Forest’s on fire, farm’s almost gone, war’s knocking at the door, and Trump’s like, “Let’s not overreact.” Buddy, you are already reacting, you’re just doing it poorly.
The smoke rising from the fields looks like a giant cigarette, huh? Yeah, that’s the planet taking a drag and thinking, “I should quit this party.”
And I love how Trump got tractors saving the day. Not policy. Not planning. Just a bunch of farmers rolling in like, “Alright, let’s fix what the government forgot existed.” That’s not infrastructure, that’s improvisation with horsepower.
Meanwhile, the Administration is worrying about oil prices going to the moon. The country’s already halfway there. It’s just going up in smoke instead of rockets.
And the stock market? Oh, it’s great. It’s fantastic. It’s on the tenth floor saying, “We’re fine.” Meanwhile, gravity’s sitting in the lobby cracking its knuckles.
The economy doesn’t collapse all at once. It just keeps saying “so far, so good” until the ground interrupts.
Not sure that reporting increased depreciation is a use of cash: "where it will begin depreciating and taking a bite out of free cash flows." Recognizing and depreciating a CPU or a building would reduce reported earnings, but not take a bite out of cash flows...
It seems that AI is an elite, government thing. For the investment it has no common utility. It can only be supported by MCISPY Complex. That complex is a dead dog of debt, now they are adding a profundity of private debt. It uses prodigious amounts of electricity and water, and the elites salivate at the prospect of ending people from the economic process.
AI doesn't promise that. It's the AI oligarchs that are promising that. The same guys drumming up AI taking over the world, maybe. It is so powerful it will fight our wars. Is there anything AI can't accomplish? If you ask the oligarchs, the answer is there is something new it will certainly accomplish now that no one has considered. I just need a few more of those expensive latest chips. I think it's pretty funny. Give me a little gold that does nothing!
This is a video of Gary, Indiana, it is replicated in many major US cities.
How is AI going to solve this problem. It is depressing.
All technological improvements, or at least what some call progress.
Anyway, tech and internet was an explosive development and in 2,000 it had a shake out. When the government develops something there is a good chance it could be beta max. The Chinese will make the best chips. Maybe they do.
I read about the scenario you postulate, rule AI, and control the world. The Aztec and Incas both created giant wheel symbols but never put it on a cart. They did amazing architectural things but never had gun powder or good metal swords or implements of death, they had no horse. 178 Spaniards, under Pizarro, killed 15,000 in a single day and captured the Inca.
It is true, whoever has the best weapons wins.
I find ChatGPT useful, it is a great synopsis for complicated questions.
I try to eliminate it in other areas. I like the individual creative process.
I am reading The Autobiography of Jung. He experienced and tried to explain the unconscious, a part of our psyche that is real and ambiguous, where inspiration comes from or God lives or some cumulative universal data center that exists in the universe.
I do not think AI will ever have a subconscious, a place where all the wonderful inventions come from.
Then there is the question of good and evil, how we decide to use these wonders.
I read it. The Industrial Revolution changed everything. Rural feudal societies became Dickens dystopias. There was over a hundred years of disruption. That is when Marx and Engles came along, an idea that made the ruling class take note of the common man’s plight.
You had change, especially in the US, where the mass of people had a say. Unions were formed, strikes and strife and when it all collapsed The New Deal brought compromise, living wages, the American Dream.
Now, we have feudalism, again, an elite nobility, a few prosper.
No doubt, AI is going to change things; the government and the elite are salivating, people are not important, they can have everything all to themselves, total brutal control.
The government, big tech investing trillions.
Who is going to pay, where is the profit, the Porsche commercial cost $50,000.00 not $500,000.00. The artist lost $1,500.
Millions thrown out of work. NY elects a communist. There will be a hundred years of adjustment, strife, suffering.
Maybe, with the conquer the world mindset, Iran and Ukraine, we will blow it all up in a year; after all, AI is hundreds of times quicker.
There is something missing in the human psyche. Guess what it is.
Bill seems to be asking if the glass is half full or half empty. The answer depends on your investing perspective which is informed by incomplete, convoluted, and inconsistent data. The confusion in the investment world in these days is immense. Save metals and do nothing.
Well the railroads are one of many examples of boom to busts in the history of finance. A lot of painful lessons but humans never seem to learn from history. Dan's contribution appears to show there's an ice burg on the horizon. I am happy to sit by the sidelines and see how big the fire gets.
Regarding “boltholes,” travel difficulties, government entanglements, and such like, are investments in France, Ireland, very rural Argentina, even Baltimore, worth the effort? Why not enlarge the compound in Laramie and move the whole kit and caboodle there?
Regarding the chart showing AI debt, Louis Navellier has this to say:
"Now, I read this article multiple times, and I have no idea what the author is talking about, except that she’s implying that technology companies are hiding $1.65 trillion in off-balance-sheet vehicles.
This was one of the most bizarre articles I’ve ever read. And I even hate to give it any time, but I just want you to know it’s bogus, okay? "
“At some point, the ‘hidden’ debt will have to come back on the balance sheet (where it will begin depreciating and taking a bite out of free cash flows).”
Depreciation does not reduce free cash flows. It is a non-cash expense, so it is added back in cash-flow calculations, and it typically increases free cash flow through a tax shield (lower cash taxes paid).
Over 3 trillion in Capex for those 5 companies. The earnings required to carry let alone reduce/retire that debt is not a reasonable number, especially when China makes a competing AI that charges significantly less per token and delivers insignificantly less product.
What is required to make a small fortune on Wall St?
A large one...
Reminds Me of the time I was placer mining . The saying back then was -how to make a little money? Take a big pile of money. Much to what You have just stated.
With the market lately I've become an expert at smaller fortunes...
Good on You. I agree .
Just a quick note that depreciation takes its bites out of earnings not cash flow. Probably just a missed proofread anyway.
I believe AI is real and beneficial. The problem is that the swindlers and the government only go after projects where money can be hidden and spread about the expense of everything else. They are most certainly not in favor of something that may be smarter than they are or that could tell them what they are doing is wrong. It will be used at our expense for a while, then they will move onto the next white elephant. Unlike human beings, AI can be and is trained to learn from its mistakes. As we are seeing over in Ukraine and Iran, cheap drones are winning wars. It is not AK-47's anymore. How come nobody is talking about where these drones are coming from, who provided them or the technology to our enemy. People should buckle up, because if they are worried about gas prices, that is only the tip of the iceberg. Our so called NATO allies think they can sit this out, but they are going to be right in the middle of it. If Russia decides to drop a bomb on Kiev, and we drop one on Tehran, it is going to be show time, and $5 gas is going to be the last think you are going to have to worry about. Sorry about that!
Oh, but they are talking about the origination of drones!
The Gerbera is a Russian multi-purpose drone.
Described as a cheaper and simplified "styrofoam" version of the Iranian Shahed-136.
-
In 2025 the Russians "accidently"(cough cough) flew these drones into Poland...
This was a test for Putin.
And a Godsend for NATO.
Realizing they are woefully unable to defend against Russian styrofoam...
Excellent column. Both Bill and Dan. I suspect that AI investment is well overdue for a correction. The dependence for funding is solved by investment but the need for power and cooling water remains. The politicians have taken note, the physics stubbornly resist the pull of investors emotion and all of it is due for a sudden correction - a reality check.
Another possibility is that the big operators and expensive Nvidia chips and data centres become obsolete and companies buy cheaper server type setups and run localised AI and so keep their data private and lower their costs.
There are large wafer semi's, 208V chips and materials like graphene (it's coming!) once developed for production can actually run semiconductors faster and cooler...
Agreed. In fact, there is an article to that in today’s Wall Street Journal. An “AI” within a given organization’s data records is probably cheaper, more effective and less likely to have been tampered with or selectively filtered.
I like the current administration. It reminds me of a guy falling out of a ten-story building saying, “So far, so good.”
That’s the whole economy, right? Forest’s on fire, farm’s almost gone, war’s knocking at the door, and Trump’s like, “Let’s not overreact.” Buddy, you are already reacting, you’re just doing it poorly.
The smoke rising from the fields looks like a giant cigarette, huh? Yeah, that’s the planet taking a drag and thinking, “I should quit this party.”
And I love how Trump got tractors saving the day. Not policy. Not planning. Just a bunch of farmers rolling in like, “Alright, let’s fix what the government forgot existed.” That’s not infrastructure, that’s improvisation with horsepower.
Meanwhile, the Administration is worrying about oil prices going to the moon. The country’s already halfway there. It’s just going up in smoke instead of rockets.
And the stock market? Oh, it’s great. It’s fantastic. It’s on the tenth floor saying, “We’re fine.” Meanwhile, gravity’s sitting in the lobby cracking its knuckles.
The economy doesn’t collapse all at once. It just keeps saying “so far, so good” until the ground interrupts.
Not sure that reporting increased depreciation is a use of cash: "where it will begin depreciating and taking a bite out of free cash flows." Recognizing and depreciating a CPU or a building would reduce reported earnings, but not take a bite out of cash flows...
I’ll raise you one on “stuff happens”, your “as good an analysis as you are likely to get”
To wit, Stuff happens deliberately.
Nice synopsis, good for thought.
It seems that AI is an elite, government thing. For the investment it has no common utility. It can only be supported by MCISPY Complex. That complex is a dead dog of debt, now they are adding a profundity of private debt. It uses prodigious amounts of electricity and water, and the elites salivate at the prospect of ending people from the economic process.
It is the ultimate insanity of our leaders.
...no investment common utility?
Ummmm
Robots?
Rocket ships?
MRI imaging?
Bio work-ups?
Autonomous vehicles?
Drones... there is so much I can't possibly list them all...
-
Ai promises more new-fangled inventions and solutions in a shorter time span than ever before in history.
We are now well engaged in the 4th industrial revolution.
The convergence of digital, physical, and biological technologies.
Accomplished only because of Ai...
AI doesn't promise that. It's the AI oligarchs that are promising that. The same guys drumming up AI taking over the world, maybe. It is so powerful it will fight our wars. Is there anything AI can't accomplish? If you ask the oligarchs, the answer is there is something new it will certainly accomplish now that no one has considered. I just need a few more of those expensive latest chips. I think it's pretty funny. Give me a little gold that does nothing!
The gov't did not develop Ai.
But the gov't understands we cannot be without it.
I think of Ai as the discovery of the wheel.
Whoever first used a wheel.
Never thought it could be used for the millions of applications we need today.
Humanity's progress is founded upon the wheel.
-
Asia, the Middle East and Europe all "utilized" wheels.
But not in the America's...
When European's landed on North American shore, they were centuries ahead in technology.
The wheel enabled foreign armies to dominate America's Indigenous.
Today, the U.S. is the leader utilizing Ai - the "21st century wheel".
With Ai, the U.S. has a chance to recoup our "brand".
Those that do not chase Ai will be like the America's in the 1500's.
Check out Mark Ford's view.
https://markford.net/the-new-age-of-artificial-intelligence-is-here-whether-you-want-to-admit-it-or-not/
https://www.facebook.com/share/v/196XViTw3R/?mibextid=wwXIfr
This is a video of Gary, Indiana, it is replicated in many major US cities.
How is AI going to solve this problem. It is depressing.
All technological improvements, or at least what some call progress.
Anyway, tech and internet was an explosive development and in 2,000 it had a shake out. When the government develops something there is a good chance it could be beta max. The Chinese will make the best chips. Maybe they do.
Your video depicts an empty city once flourishing with industry.
Don't know about you, but I recall very distinctly, particularly during Bush years, "outsourcing" was THE rage!
All elite's and government goons screaming "Globalization!"
"Hurry hurry, trade our sovereignty for inferior goods!"
Some of those "cheap" goods have become foreign icon brands today.
Globalization was a huge mistake.
The gov't did not develop Ai.
But the gov't understands we cannot be without it.
I think of Ai as the discovery of the wheel.
Whoever first used a wheel.
Never thought it could be used for the millions of applications we need today.
Humanity's progress is founded upon the wheel.
-
Asia, the Middle East and Europe all "utilized" wheels.
But not in the America's...
When European's landed on North American shore, they were centuries ahead in technology.
The wheel enabled foreign armies to dominate America's Indigenous.
Today, the U.S. is the leader utilizing Ai - the "21st century wheel".
With Ai, the U.S. has a chance to recoup our "brand".
Those that do not chase Ai will be like the America's in the 1500's.
I am blown away by Ai and what I see.
The progress is very fast, it's hard to keep up.
And that is why we should be concerned keeping up rather than letting go...
I read about the scenario you postulate, rule AI, and control the world. The Aztec and Incas both created giant wheel symbols but never put it on a cart. They did amazing architectural things but never had gun powder or good metal swords or implements of death, they had no horse. 178 Spaniards, under Pizarro, killed 15,000 in a single day and captured the Inca.
It is true, whoever has the best weapons wins.
I find ChatGPT useful, it is a great synopsis for complicated questions.
I try to eliminate it in other areas. I like the individual creative process.
I am reading The Autobiography of Jung. He experienced and tried to explain the unconscious, a part of our psyche that is real and ambiguous, where inspiration comes from or God lives or some cumulative universal data center that exists in the universe.
I do not think AI will ever have a subconscious, a place where all the wonderful inventions come from.
Then there is the question of good and evil, how we decide to use these wonders.
The evil seems to be winning.
Read this
https://markford.net/the-new-age-of-artificial-intelligence-is-here-whether-you-want-to-admit-it-or-not/
I read it. The Industrial Revolution changed everything. Rural feudal societies became Dickens dystopias. There was over a hundred years of disruption. That is when Marx and Engles came along, an idea that made the ruling class take note of the common man’s plight.
You had change, especially in the US, where the mass of people had a say. Unions were formed, strikes and strife and when it all collapsed The New Deal brought compromise, living wages, the American Dream.
Now, we have feudalism, again, an elite nobility, a few prosper.
No doubt, AI is going to change things; the government and the elite are salivating, people are not important, they can have everything all to themselves, total brutal control.
The government, big tech investing trillions.
Who is going to pay, where is the profit, the Porsche commercial cost $50,000.00 not $500,000.00. The artist lost $1,500.
Millions thrown out of work. NY elects a communist. There will be a hundred years of adjustment, strife, suffering.
Maybe, with the conquer the world mindset, Iran and Ukraine, we will blow it all up in a year; after all, AI is hundreds of times quicker.
There is something missing in the human psyche. Guess what it is.
...and I believe this is part of natural selection.
Machine is reaching for God.
-
I believe it is inevitable humans will choose to be cyborgs.
Likely cyborgs would never get sick, would possess tremendous strength and agility... perhaps see through walls ... I don't know.
Human desire and envy guarantees it will happen.
-
In this scenario, I believe Ai will have a conscious and emotions.
Quite a world you live in!
Bill seems to be asking if the glass is half full or half empty. The answer depends on your investing perspective which is informed by incomplete, convoluted, and inconsistent data. The confusion in the investment world in these days is immense. Save metals and do nothing.
Thanks to Dan for that little note about the hidden AI debt. So I dove into the Nikkei article. To see the methodology behind their $1.65T number.
Not exactly forensic accounting on the part of Nikkei.
Estimated indeed.
But what was very interesting after doing the research, was how far out on a limb Oracle has gone.
https://lucaskandia.substack.com/p/the-smoke-and-the-fire
Well the railroads are one of many examples of boom to busts in the history of finance. A lot of painful lessons but humans never seem to learn from history. Dan's contribution appears to show there's an ice burg on the horizon. I am happy to sit by the sidelines and see how big the fire gets.
Jim Marshall
Regarding “boltholes,” travel difficulties, government entanglements, and such like, are investments in France, Ireland, very rural Argentina, even Baltimore, worth the effort? Why not enlarge the compound in Laramie and move the whole kit and caboodle there?
Laramie? Yeh, and just think when you have a free moment, just step outside and fly your kite.
funny but true
Désolé, sans le vent, je ne peux pas le faire. Je peux peut-être emprunter votre cerf-volant? Vous pouvez m’aider en sifflant?
Exactly
Regarding the chart showing AI debt, Louis Navellier has this to say:
"Now, I read this article multiple times, and I have no idea what the author is talking about, except that she’s implying that technology companies are hiding $1.65 trillion in off-balance-sheet vehicles.
This was one of the most bizarre articles I’ve ever read. And I even hate to give it any time, but I just want you to know it’s bogus, okay? "
So I don't know what to think.
Well , I could say figures lie and liars figure. Does this help?
https://markford.net/the-new-age-of-artificial-intelligence-is-here-whether-you-want-to-admit-it-or-not/
“At some point, the ‘hidden’ debt will have to come back on the balance sheet (where it will begin depreciating and taking a bite out of free cash flows).”
Depreciation does not reduce free cash flows. It is a non-cash expense, so it is added back in cash-flow calculations, and it typically increases free cash flow through a tax shield (lower cash taxes paid).
Over 3 trillion in Capex for those 5 companies. The earnings required to carry let alone reduce/retire that debt is not a reasonable number, especially when China makes a competing AI that charges significantly less per token and delivers insignificantly less product.