We have the makings of the AI investment bubble popping. The popular news is sending out information reflecting a negative POV for AI development. Without AI excitement, there is not much else to promote US stock market upwards.
Inflation is crunching all US citizens, and inflation is going to be here for years. Until US administration decides to tax the rich instead of put heaver taxes (tariffs) on the bottom 99%.. Further USA debt spending and war efforts are not abating, but the safety net for US citizens is being dismantled. Lastly, with expulsion of cheap labor, and AI data centers demanding energy and water, food prices will continue to skyrocket.
All of this ends with US stock market going down as profits pullback. But this time is different.
With all the negative about AI, one thing is clear to me, it will be immense efficiencies to corporations faster than the internet did. It will be hard to capture this in a GDP number, but make no mistake, companies that can leverage AI to improve their efficiencies will be rewarded in the stock market.
The problem is, the larger the company, the harder to actually manifest this benefit. I expect after this drawdown an EXPLOSION of new businesses powered by AI. People of 1-5 in a company providing the value of 20 people. These companies can adjust much quicker than large companies. Large companies will return to outsourcing to many small companies to get the work done.
Eventually this will massively benefit large companies. I have huge optimism for some companies after this next downturn. Buying general ETFs wont be a winning strategy.
Keep your ears open, the more negative AI news you hear is a signal that the bubble is popping.
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