It’s a wake up and smell the coffee sort of morning in the AI markets. AI is here to stay. Everyone is using it. Why are prices tanking? It’s about competition, adoption and data sovereignty. Maybe it’s time for a rethink? How did it get so huge so fast? That’s a question about overly cheap liquidity and speculation, which is why Tesla’s numbers are so interesting.

The AI revolution is very real, but the froth around its valuations is not. The real value of AI won’t be in how hyperscalers establish themselves to “rent” us AI services, but how the real economy reacts to the opportunity, and smart firms learn to innovate it to make their businesses better and more profitable. The real upside is immense.

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!

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?

Michael Burry is not out. His Stuffed Turkey comments sound like a prophesy. AI is evolving fast and not necessarily in the direction the current market understands. Beware no-see-ums. What if the current tech is a dead end, and the financials collapse? A big shift may become clear in coming months… and where to invest next! And let’s talk about bit-flips!

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.

Headlines about a deepening stock sell off, the rising “fear” gauge, and unsustainable valuations, are dominating the news flow. Relax. End of the world market crashes happen all the time. Sit back and enjoy the show. Get your buying boots ready.

What will the future look like? Many Porridge readers fear Technofeudalism – where a new aristocracy of big tech will replace democracy and make serfs of us all. What might it look like…?  

Sir Tim Berner-Lee’s autobiography, “This Is For Everyone” is a delight. In a world that is increasingly riven and polarised - largely through the deliberate misuse of the tools his web protocols enabled - his calls for a polite reset will likely fall on deaf ears… There is simply too much money to be made monetising the passions and addictions that drive social media – which is why we ultimately may need to regulate Big Tech and the Web.

The AI sector looks likely to be the biggest bubble in market history – until the next one. When it pops – and it surely will – the effects will resonate round markets. Like all good Snake Oil scams, AI has promised everything and claims divinity. Too many folk have embraced the hype and hopes of easy money – but that has always been the way of markets.