Is This AI Stock Predictor Really Making Millionaires Overnight? Discover the Shocking Truth!

The stock market has transformed, evolving from a playground for the elite into a realm that touches the lives of everyday Americans. Peter Atwater, of Financial Insyghts, aptly observed, “We like to joke that the markets are not the economy, but we’ve reached a point now where the economy is the markets.” This evolution has fueled a surge in retail investing among the populace, significantly altering the landscape of American finance.

In recent articles, I’ve delved into the rise and potential risks associated with this new wave of retail investing. More Americans than ever own stocks, with young women emerging as the fastest-growing demographic of investors. The introduction of “commission-free” trading has enticed millions to engage in high-risk trading of speculative stocks and derivatives, all under the banners of access, equality, and democratization. Yet, as we navigate through recent weeks, predictions of a looming market bubble are echoing louder, with visible cracks beginning to emerge in the consumer economy and private credit.

Three key narratives have surfaced that illuminate the current state of the stock market. The first centers around the late David Graeber’s 2018 book, Bullshit Jobs: A Theory, in which he argued that capitalism, in response to prior waves of automation, created a class of white-collar workers whose roles lacked meaningful utility. This theory resonated widely, prompting many professionals to disclose their own uncertainty regarding the necessity of their contributions. While white-collar workers have traditionally been shielded from layoffs in economic downturns, this time is different. October witnessed significant layoffs at major companies like Amazon, UPS, Target, and General Motors. Interestingly, the stocks of these companies soared following layoff announcements, signaling that Wall Street, too, perceives these corporate positions as superfluous.

Traditionally, economic downturns spare the professional-managerial class earning six-figure salaries. However, as companies seek to maintain revenue amidst a consumer recession, slashing payrolls becomes a viable strategy for improving balance sheets. Analysts on Wall Street have dubbed this phenomenon a “jobless boom,” raising questions about the purpose of the capital being freed up. In many instances, it is earmarked for the cost of what is replacing labor: chips.

The Chip Economy

This brings us to the second narrative, focusing on chips and their devaluation schedules. Approximately $2 trillion of market capitalization hinges on this unresolved issue. Major tech players like Microsoft, Google, Oracle, Amazon, and Meta have extended their depreciation schedules from three to four years in 2020 to five to six years by 2025. These schedules, crucial for tax planning, allow companies to recoup costs over time.

Contrastingly, chip supplier Nvidia is introducing an annual cycle for chip releases, with CEO Jensen Huang emphasizing innovation that renders previous models obsolete. Huang recently remarked, “You couldn’t give Hoppers away” — referring to a GPU model from 2022 — once the new Blackwell model starts shipping in volume, which claims to offer twenty-five times the performance per dollar while consuming a quarter of the energy.

The disparity between the actual and reported lifespan of these assets represents a form of creative accounting among these tech giants. Lengthening the apparent life of chips allows companies to ease reported costs over a longer period, thereby artificially inflating revenues. Recent discussions have revolved around the concept of “circular financing” at the heart of the AI boom, often conflated with vendor financing and round-tripping. While opinions on Nvidia’s practices vary, the outcome remains consistent: all parties involved witness an increase in capital expenditure.

In a notable transaction, Nvidia invested $100 billion in OpenAI, which, in turn, agreed to return the funds by purchasing Nvidia-made chips. This transaction exemplifies a circular funding model with Nvidia at its center. Some analysts, like Matteo Wong and Charlie Warzel at the Atlantic, have likened this situation to the “Nvidia-state.” However, it might be more appropriate to interpret Nvidia’s operations as a quasi-Keynesian economic model at a corporate scale, larger than the GDP of nations like France or India.

Nvidia is not merely a chip supplier; it functions as a central bank within its sector. In a market where the broader economy is flatlining, save for a few titans of the S&P 500, companies like Nvidia can ascend without the direct involvement of ordinary consumers, perpetuating a cycle of corporate financing.

The stock market continues to hover near all-time highs, yet American credit scores are plummeting to historic lows. This disconnect raises profound questions regarding employment and economic health. The correlation between stock market growth and job openings, a longstanding belief, has eroded. Since 2022, the stock market has surged by 70%, while job openings have decreased by 30%. The pressing inquiry is whether the advent of AI has altered corporate attitudes toward the labor market.

While AI may not replace every worker, companies are gravitating towards a mindset of “control what you can control,” leading to labor cost reductions reminiscent of austerity measures in previous economic climates. As we witness the stock market's resilience despite a struggling job market, the implications for American workers are profound.

Zohran Mamdani’s recent election as New York City mayor introduces a critical opportunity for the Left to reengage with financial expertise, blending economic understanding with grassroots movements. The dreams of funding essential services like transit, housing, and healthcare must navigate the complexities of the market. AI emerges not merely as a technological advancement but as a transformative force, recalibrating the dynamics of labor and capital. The integration of class interests between blue- and white-collar workers could redefine the economic landscape, especially as we grapple with the potential outcomes of widespread automation and labor displacement.

In this rapidly evolving landscape, it is imperative to remain vigilant and adaptive, recognizing that while the stock market may not require the active participation of every worker, the essence of our collective labor remains integral to its continued growth. Understanding these shifts can empower us to navigate the intricate relationship between technology, labor, and the economy in the years ahead.