Rising pressure on artificial intelligence (AI) debt, growing scepticism around massive AI spending, and investors beginning to question whether the returns could justify the investments. Continue…

by Roger Montgomery Posted in Technology & Telecommunications.

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Artificial intelligence (AI), inference is getting cheaper at a pace that is rewriting the usual rules of technological progress. Continue…

by Roger Montgomery Posted in Market commentary, Technology & Telecommunications.

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In a recent Substack post, NYU Stern School of Business Professor Aswath Damodaran – widely recognised as the ‘Dean of Valuation’ – delved into the current state of the equity market and the wave of artificial intelligence (AI) capital expenditures (capex). Continue…

by Roger Montgomery Posted in Market commentary.

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BCA Research has published its latest equity strategy report authored by Noah Weisberger, Yifei Liu, and Allen Li, titled Cerberus Paribus: The Three-Headed Threat To Equity Valuations (Bonds, Earnings, and IPOs).

BCA’s principal stance on United States equities remains “constructive”, however the report warns about the shifting mechanics driving the market. Specifically, the path toward their S&P 500 8,100 year-end target is transitioning from a regime fuelled by price-to-earnings (P/E) multiple expansion to one increasingly reliant on fundamental earnings growth. Continue…

by Roger Montgomery Posted in Economics, Market commentary.

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For two years, Silicon Valley and global equity markets agreed that artificial intelligence (AI) is an uncapped frontier where aggressive capital deployment and unchecked spending would automatically yield exponential returns. Or, perhaps, equity markets believed the spin coming out of Silicon Valley. 

Whichever scenario is true, reported operating results over the past week have confirmed the shift in sentiment toward AI.

Slowing revenue, public market pullbacks, and fluid enterprise strategies suggest the market’s appetite for unconstrained AI spending is finally hitting a ceiling. Investors have well and truly moved past the honeymoon phase and are demanding proof of a sustainable economic model. Continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Insightful Insights, Manufacturing, Market commentary, Market Valuation, Technology & Telecommunications.

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I just returned from an inspiring presentation on artificial intelligence (AI) by Alan Finkel AO, Australia’s Chief Scientist from 2016 to 2020, only to read that the Reserve Bank of Australia’s (RBA) 2,200 staff had rejected a 9.5 per cent pay rise, over three years. The proposal included a 3.5 per cent increase in the first year, followed by a 3.0 per cent increase in each of the next two years. 

Together with the Head Office renovation, now expected to cost $1.2 billion, this seems like a “joke”, particularly when we consider that total RBA staff numbers have increased by around 800, or 57 per cent, over the past five years. And this doesn’t include the RBA’s fiscal 2025/26 accounting loss of A$8.5 billion on the unrealized value of its government bond and foreign exchange portfolio. Continue…

by David Buckland Posted in Economics, Editor's Pick, Insightful Insights, Market commentary.

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For the last twenty years, Silicon Valley – technology’s epicentre  – enjoyed a relatively frictionless relationship with the rest of society. We celebrated its invention and innovation, the high-paying jobs it created and the investment returns.

But after twenty years, the marriage appears to be dissolving.

In Robert Bryce’s 9½-minute documentary, The Data Centre Backlash, a grassroots anti-data-centre movement is shown rising worldwide, from Texas to Ireland.

The doco shows local communities waking up to the unquenchable demands that generative AI and hyper-scale cloud computing place on local water and electricity grids – and they’re pushing back successfully. Continue…

by Roger Montgomery Posted in Market commentary, Technology & Telecommunications.

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Everyone seems to have jumped on the carcass of the Firmus Initial Public Offering (IPO) to dissect what went wrong. Since it was a local company listing on the domestic market, it’s understandable Australian news outlets and financial commentators have shown so much interest. 

But while local commentators and media outlets continue to report on what would have become Australia’s largest-ever float, U.S. commentators are also responding. The difference is some are reading the pulled IPO through a far more ominous lens, one that says the artificial intelligence (AI) bubble is ending. Continue…

by Roger Montgomery Posted in Global markets, Market commentary, Market Valuation, Technology & Telecommunications.

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