The AI market has been diving business expectations and markets – everyone believes it will deliver a growth, productivity and profit revolution across the global economy. What if it doesn’t? What if it’s not a leap forward, but just a step-change?

Are we about to have an Emperor’s New Clothes moment and a return to sane valuations? The Tech markets create enormous real value and growth across economies, but like every other bubble in financial history they are hyped to high heaven. In the short run there is money to be made playing the game. In the long run; what is real and what is not matters. The trick is to exit the short-term game before the long run outcomes are apparent to everyone.

There were a number of “Moments” over the Weekend. A Peace Deal in the Gulf was inevitable – but we will see energy supply chains slowly normalise and lower inflationary expectations. Equally important is the US Government switching off Anthropic’s most powerful AI models. Collectively, these two events could have enormous consequences in terms of global power and hegemony.

Markets can’t wait for the Iran war to end – so they can get back to speculating trillions on the AI revolution. The hyperscalers expect to reap monopoly scale rents from owning AI closed-weight models and the digital infrastructure of datacentres and chips. But what if households can build their own AI capabilities cheaper and more effectively? Pop!

Past performance is not a guide to the future. Tesla trades on a massive PE because folk believe Elon Musk will repeat his success in EVs across AI, Capacitance, Robotaxis, Autonomous Driving and Robotics. But hype, showmanship, undelivered promises and increasing competition are leaving his ventures in the literal rear-view mirror.

Social media is deliberately addictive? Who knew? While markets barely reacted to yesterday’s Product-Liability award against Meta and Alphabet in California, the growing pushback against Big Tech will see valuation multiples diminish over the long run as increased regulation becomes inevitable. Perhaps it’s time to look at how Tobacco firms have evolved to understand the future value of Social Media parasites?

The future will be set not just by the defence and deterrence discussions last weekend in Munich, but by how global markets react to competition. New Chinese AI drops from DeepSeek and Qwen may challenge US hyperscalers and challenge expectations of global demand and markets.  

Did someone say Century Bond? What’s not to like about the bond market? Rates are going to fall! Everyone wants to buy credit (at historically tight spreads) and the biggest most successful firms on the planet are paying 70 cents over Treasuries for your money! What could possibly go wrong?

Where are the Tech markets and AI heading? Are we due a meltdown or melt-up? Will the bubble bust, or do the current ructions reflect growing uncertainty on which directions upside lies? There is plenty to consider when trying to predict where AI and Tech eventually go.

Markets drunk on expectations and hype will believe what they want to believe – but as bubbles pop and truths are exposed, then sentiment can shift suddenly. Yesterday’s market darlings become today’s scams. Who knew? Relax. The sun will come up tomorrow. Enjoy the show.