The AI Twilight Zone
The Semiconductor complex is gapping down, and we still have 3 hours to close.
In what I consider to be my “seminal” piece for the current market setup, sent out 3 weeks ago, I quoted a long George Soros quote. This is part of it:
“A twilight period ensues during which doubts grow, and more people lose faith, but the prevailing trend is sustained by inertia….Eventually a point is reached when the trend is reversed; it then becomes self-reinforcing in the opposite direction.”
NVIDIA is down 5% on the day — but today’s down range is 10%, this isn’t normal for this stock. Volume is also disproportionately high.
Could this mark the end of the twilight period that Soros was referring to — and start a down move?
In my seminal piece (linked below) I give a historical context of modern financial markets up until today — where the indices are driven by the AI trade across the board.
I approach my analysis via the prism of George Soros’s teaching on reflexivity, boom/bust cycles, fallibility etc.
I consider the below to be one of my best pieces yet.
Here’s an excerpt:
The A.I. Rush and the Ultimate Bubble
Since the launch of Chat GPT in late 2022 there has been a rush towards everything A.I. The invention of generative A.I. is unleashing people’s imagination en masse — and almost no prediction can be considered too extreme.
And so, every company is forced to have an A.I. strategy and talk about it repeatedly. Naturally, this has increased business in the technology space: GPUs, Data Centers, Cloud, Infrastructure etc.
I contend that the theme of A.I. could become the ultimate bubble. Why? Because of the thinking aspect around the mass adoption of A.I.
If people start to believe that A.I. can fully replace human intelligence — then what is the need for humans? And if humans will one day be fully replaced, then there is no logical limit for how far A.I. can go.
So how can the invention and adoption of A.I. become a bubble?
Read more below.
Sincerely,
Philo
