Blain’s Morning Porridge July 29th, 2026 – AI is dead. Long Live AI.
“Remember…. All I am offering is the truth. Nothing more.”
Markets are all-a-wobble as the AI revolution morphs from a picks and shovels Klondike into a “who is going to make most money” proposition. About time. Who will be the winners and losers in the long-term. In the short-term there is going to be pain and losses as the current high-water retreats.
Key takeaways this morning:
- Apple becomes No 1 Stock because it stood still.
- Winners will be firms that best integrate AI into their business and boost the bottom line.
- Losers will stem from leverage plays, collateral and capacity issues as the market continues to evolve and shift tracks.
- AI boom is not just a Tech story – it’s also geopolitical as China is set to take large part of market.
Readers of the Morning Porridge will spot a change from this morning. From now on the email will be shorter and to the point – key takeaways. To read the whole story, click to the website. Full access to Silver and Gold subscribers, and 3 articles a month for Bronze members. Next month the Podcast will switch to subscription only – and the price to new subscribers will rise to cover the rising costs of running the Porridge.
Markets never repeat, but they sure do resonate as the same themes keep repeating. First mover advantage often becomes a eulogy. Yesterday, Apple, the also-ran of the Mega-stocks in terms of its slowness to adopt AI, became (again) the most valuable company on the planet. It’s a clear demonstration of enthusiastic dreams vs practical business.
Turns out it was not about the picks and shovels of the AI race… it’s about how real-world, real-economy firms that will profitably innovate AI within their businesses. (No Sh*t Sherlock.) AI is just another “thing”. Chips, datacentres, and the rest are just steps on the way up – they are not the summit of the AI revolution. Picks, shovels, DRAM – these are just tools. Future prosperity will be about how you use them – which is always what counts. Fast movers will be rewarded – so expect lots of bogus company drivel about firms are building out internal AI.
The shift, what some would label a “rotation” from the builders of AI infrastructure to the actual users, has been swift. Hence all the market angst about what the collapsing Korean market means, or the tumble in chips, and the earnest debate about whether open or close weight AI will eventually consume us all… Important stuff – but not core.
Apple sums it up pretty well. It will remain the firm making and selling very expensive bright shinny stuff – but instead of spending billions to build in-house AI capabilities, it stood still and let the madness unfold around it. Today it is simply integrating developers’ AI products into its stuff – and they will claim it makes the “Apple Ecosystem” even better and more user friendly. Joy. I suppose it will mean even more “subscriptions” for services I will forget I’m paying.
Stories never really change. Apple looks to be the tortoise that won the race.
And… that’s just fine. Over the next few years Apple’s customers will replace billions of very expensive iPhones and Mac-Pros with even more expensive iPhones and Mac Pros with integrated AI tools that will make them slightly more “something”. Apple will continue to make enormous profits from selling bog standard tech in expensive boxes, sold as bright shiny new stuff to addicts like myself. And they will spend the profits to buy-back their own stock to push up the price… while the hyperscalers left with acres and acres of surplus DC capacity will become credit plays.
What was the last product Apple actually innovated themselves? Doesn’t matter… as long as their customers keep taking the Blue Pill, they will keep the Apple Stores busy… (The Red pill vs Blue pill meme is the premise at the core of the Matrix (a 1999 movie about how we exist within a computer digital dystopia…))
My great chum Julian Wheeler of Shard, a most entertaining and very English chap following US stocks, reckons firms that can best use AI Tech will be the winners – he’s picking US banks who are using AI to improve back-offices, cut costs and staff, and are building out their internal AI abilities will be winners. (European banks’ back-office tech is powered by hamsters on wheels.) He’s also picking airlines, rail, hotels, insurance and retail – the smart names who have the potential to use AI cleverly.
Here in the UK the railway team walks the line to check how f****d up the Surbiton points are each day. US railways send a drone with a camera.
But of course, there are always losers. This morning there is angst about how exposed some hedge funds might be to margin calls on their lending to hyperscalers, or deals they secured on what they thought might be a chip scarcity or the early perception there wouldn’t be enough data centres. There are enough of us around who recall the overcapacity issues when the dot.com bubble deflated. There will be questions about how the circularity of financing/use between the AI Developers, Hyperscalers and Chip Makers might all unravel. There is nothing the market doesn’t like more than a balloon collapsing from the inside out…
A longer-term issue will be the future of AI in terms of who will be developing the Tech. The wake-up call has been the launch of Chinese AI tech which now competes head-to-head with US tech. That creates competition and brings costs down – tough for expensive production factor US firms but also mirrors the hegemonic struggle between the rising Middle Kingdom and the End of the America Age….
And that’s a story for another day…
Out of time and back to the day job…
Bill Blain
Author of the Morning Porridge
CEO Windshift Capital
Advisor – Spitfire Strategic Capital
Meanwhile, don’t forget about my new book:
You can read a review on the Society of Professional Economist’s website here.
The Battle For Hamble is a proper grown-up examination of how economies fail: a tale of Greedy Corporates, Bad Planning and Economic Illiteracy. It uses a wholly unnecessary Gravel Quarry in the middle of a prosperous village to illustrate the multiple failings and abdications of responsibility that have created Broken Britain. It’s about bureaucracy, money, exploitation and shareholders vs stakeholders. It’s about social injustice – asking why it’s ok to put 6000 jobs at risk so corporate bosses can reap bigger bonuses! Whether is the Hamble Quarry, HS2 or the abysmal state of UK armed forces due to bad procurement, read the book to understand how its broken process and bureaucratic indifference that is sinking Britain.
