OpenAi released Chatgpt in November 2022.
That was only a month after the stock market in the Berenmarkt and a few months after the inflation of 9%was.
At that time, almost everyone assumed that a recession was a foregone conclusion.
It didn’t happen.
Would we have seen an economic contraction if our technical rulers would not spend an insane AI expenditure from there?
Could there have been an even worse decline from the trade war earlier this year without the huge AI expenditure?
We do not live in a world with counterfishes.
But this feels like the week in which everyone decided to place data behind the idea that AI has more or less worn the economy and markets.
There were three graphs that I saw all of them all saying the same – the technical giants give a boat load to the AI weapon race.
Here is one of them Sherwood News On the forward Capex estimates for five of the largest spenders:
Every step is just a bit steeper.
This is a similar graph of The Wall Street Journal On four of the Mag 7:
Up and to the right.
And finally The financial time shows the Capex expenditure in the past three years:
Microsoft, Google, Amazon and Facebook have issued a combined $ 151 billion in 2023, $ 246 billion in 2024, and is predicted that this year is more than $ 320 billion in competition for AI -supremation.
The expenditure by the MAG 7 increased 40% in 2024, while the other 493 shares in the S&P 500 Capex increased by less than 4%.
The enormous amount of expenses that the Spirit are astonishment, but is logical if you consider the chance in AI.
It is not only feeding the stock market, but it now also has a real impact on the economy. Pure mac Shared what could be the graph of the year so far:
This is crazy. Consumer expenditures make up ~ 70% of the US economy. AI expenditure is currently adding more to GDP than consumer expenditure!
What now?
Nobody knows how all this shakes.
My best gamble is that there are two results, both of which look clear with the benefit of retrospect when things play in both ways:
(1) Of course these companies crashed and burned. They have spent way too much. The ROI was less than expected. The expectations were much too high. It was clear!
(2) Of course these companies continued to dominate. They threw a Kajillion dollar at a game-changing technology. AI changed the world and to the Victor Go the Spoils. It was clear!
I just don’t know what it will be.
Perhaps option (1) is first followed by option (2). Or we get something in the middle.
This is a fascinating time in the macro landscape.
The labor market can soften. Housing and construction activity remain filled in due to high mortgage interest. Rates can delay consumer expenditure.
Yet the biggest, most important companies on the stock market in the pot are and continue to spend the way your drunk friend in Vegas who went to the ATM for the third time before midnight.
AI Capex can save the economy again if all these expenditures translate into immediate returns for the MAG 7.
If it’s not … look out below?
We must ultimately experience an economic contraction … right?
Perhaps AI excesses is sufficient.
Or maybe we go for the rest of this decade without another recession due to a transforming technological innovation.
I would like to give you the final answer, but I am not sure if anyone knows how this is playing.
Continue reading:
Mega Cap World Domination
This content, which contains security -related opinions and/or information, is only provided for informative purposes and must not be invoked in any way as professional advice, or approval of practices, products or services. There can be no guarantees or guarantees that the views expressed here apply to certain facts or circumstances and should not be broken down in any way. You must consult your own advisers on legal, business, tax and other related matters with regard to investments.
The comments in this “message” (including any related blog, podcasts, videos and social media) reflects the personal opinions, views and analyzes of the employees of Ritholtz Wealth Management that provide such comments and should not be considered the opinion of Ritholtz Wealth Management LLC. Or the respective affiliated companies or as a description of advisory services provided by Ritholtz Wealth Management of Performance Returns from a Ritholtz Wealth Management Investments Client.
References to effects or digital assets, or performance data, are only for illustrative purposes and are not an investment recommendation or offer to offer investment advice services. Graphs and graphs that are provided inside are only for informative purposes and may not be invoked when making an investment decision. Performance from the past are not indicative of future results. The content only speaks from the specified date. Projections, estimates, predictions, goals, prospects and/or opinions expressed in these materials can be changed without notification and can differ or are contrary to opinions expressed by others.
The Compound Media, Inc., a branch of Ritholtz Wealth Management, receives payment from different entities for advertisements in affiliated podcasts, blogs and e -mails. Recording of such advertisements is not an approval, sponsorship or recommendation, or any connection with it by the content -maker or by Ritholtz Wealth Management or one of its employees. Investments in securities involve the risk of loss. See here for extra advertising disclaimants: https://www.ritholtzwealth.com/advertising-disclaimers
See disclosures here.
#eats #economy #wealth #common #sense