Friday links: the AI buildout

Quote of the Day
"The capabilities of AI are becoming more powerful, while the economic underpinnings of the AI buildout—and, as we’ll discuss, the political support for AI—are becoming more vulnerable."
(Derek Thompson)
Chart of the Day
The volatility even among the biggest companies in the world is off the charts. (chart via YCharts)
Yields
- 30-year Treasury yields are pushing to pre-GFC levels. (apollo.com)
- Pay attention to yields, not what the Fed says. (trendlabs.com)
Strategy
- Momentum investing is not for the weak of heart. (awealthofcommonsense.com)
- Risk management is a skill. (oldroperesearch.substack.com)
IPOs
- IPO buyers increasingly look like bag holders. (morningstar.com)
- Which could put a crimp on these semiconductor companies planning to go public. (pitchbook.com)
AI
- A reminder that Larry Ellison has bet the future of Oracle ($ORCL) on AI. (nytimes.com)
- Amazon ($AMZN) is pouring capital into AWS. (tomtunguz.com)
- James Pethokoukis talks with Azeem Azhar about the state of the AI economy. (fasterplease.substack.com)
Stay in touch
- Are you a financial advisor? Sign up for our exclusive Talking Wealth newsletter. (talkingwealthpod.com)
- Don't miss a thing! Sign up for our daily e-mail newsletter. (abnormalreturns.com)
Autos
- A look at Tesla's ($TSLA) position in the American EV market. (theatlantic.com)
- Rivian ($RIVN) saw an uptick in sales. (wsj.com)
- Hybrids are having a moment. (cleantechnica.com)
Defense
- Just how much have American weapons stockpiles fallen? (cnn.com)
- Can startups help fill the gap? (wapo.st)
Economy
- Consumers HATE inflation. (gelliottmorris.com)
- American consumers keep on spending. (bonddad.blogspot.com)
- Americans are telling CEOs that affordability is the issue. (axios.com)
- How Warsh shot himself in the foot. (stayathomemacro.substack.com)
- The case for higher rates. (axios.com)
Earlier on Abnormal Returns
- What you missed in our Thursday linkfest. (abnormalreturns.com)
- Longform links: obsolete virtues. (abnormalreturns.com)
Mixed media
- Fitness trackers are really just guessing at your calories burned. (engadget.com)
- How good is AI at measuring calories from photos? (sciencedaily.com)
- When it comes to a sandwich, sometimes you just want someone to decide for you,. (slate.com)
- These restaurants that are opting out of AI. (eater.com)

Facts Only

* AI capabilities are becoming more powerful.
* Economic underpinnings of the AI buildout and political support for AI are becoming more vulnerable.
* 30-year Treasury yields are pushing to pre-GFC levels.
* Attention is advised on yields rather than solely on Federal Reserve statements.
* Momentum investing requires skill.
* Risk management is a skill.
* IPO buyers increasingly look like bag holders.
* This could put pressure on semiconductor companies planning IPOs.
* Larry Ellison has bet the future of Oracle on AI.
* Amazon is pouring capital into AWS.
* There is discussion about the state of the AI economy between experts.
* Tesla's position in the American EV market is noted.
* Rivian saw an uptick in sales.
* Hybrids are experiencing a current moment.
* American consumers exhibit a negative view of inflation while continuing to spend.

Executive Summary

The economic and technological landscape is characterized by increasing AI power juxtaposed with growing vulnerability in the underlying economic structures and political support for AI development. Market volatility is extremely high across major corporations, evidenced by the volatility even among the world's largest companies. Interest rates and yield expectations are shifting; 30-year Treasury yields are approaching pre-Global Financial Crisis levels, suggesting a recalibration of monetary policy emphasis, with some analysts advising attention to yields over central bank statements. Investment strategy suggests that momentum investing requires skill, and effective risk management is considered a necessary skill. In the IPO market, there is a perceived trend where buyers exhibit behavior similar to those holding onto assets, which may create pressure on publicly listed semiconductor companies planning listings. Significant capital is being directed toward AI infrastructure, with entities like Amazon pouring capital into AWS, and major figures like Larry Ellison betting future growth on Oracle.

Full Take

The narrative juxtaposes exponential technological advancement, specifically in AI, against systemic fragility in the economic and political scaffolding supporting it. The core tension lies between the perceived boundless potential of AI capabilities and the diminishing security of the economic systems funding that expansion. This creates a risk profile where high-growth bets are being made on an infrastructure increasingly reliant on tenuous political will and unstable financial conditions, as indicated by the volatility in market yields. The implication is that technological momentum is not sufficient to overcome structural vulnerabilities; instead, attention must shift from superficial indicators to fundamental risk management and yield awareness. Furthermore, the observation regarding IPO buyers suggests a potential decoupling between perceived asset value and investor psychology, hinting at a layer of sentiment-driven risk hidden beneath official metrics. The focus on specific corporate bets (Oracle, Amazon) within the AI context underscores how foundational technology shifts translate directly into concentrated financial risks for investors navigating an environment where policy and market confidence are intrinsically linked to technological success.

Sentinel — Human

Confidence

This text functions primarily as a highly curated collection of disparate news links and quotes rather than a cohesive analytical essay, suggesting human compilation.

Signals Detected

Varied sentence structures and distinct topical shifts typical of a curated newsletter format.

Appears coherent as a collection of disparate financial/news links, suggesting curation rather than generative narrative.

The structure strongly suggests an aggregation of headlines and links from various sources, characteristic of a curated content feed.

No specific, verifiable claims are presented for forensic analysis; it is purely a compilation of external references.

Human Indicators

The juxtaposition of high-level macroeconomic commentary (Thompson quote) with specific market tickers and niche lifestyle content (sandwich AI) suggests a human editor or curator selecting varied, seemingly unrelated pieces.