Macro Minute: Week of July 21, 2025
The other day I listened to this podcast; a very thought-provoking perspective from Joe Davis and Vanguard. They discussed Artificial Intelligence (AI) from a different angle than I had heard before. They also prescribed different investment implications than what is widely touted as the way to play AI. I plan to add his book to my summer reading list.
To begin, Joe looks at the investment landscape as having a binary outcome. Either AI will usher in a new above average growth phase, or the economy will succumb to the large debt, deficit, and aging demographics that plague the world. If it is the triple D’s, then we will have below expected growth in the world. If it is AI led growth, then the expectations of growth are too small. In other words, all the growth expectations are either going to be too high or too low.
Now in Joe’s mind AI represents a General-Purpose Technology (GPT). Historical GPT’s are revolutions like electricity or the internet. Technology that comes along and increases productivity and revolutionizes industries. Just like with those technologies, the ultimate winner of that revolution is not known until years later. In the case of electricity, the industrial assembly lines were impacted much more than the power producers themselves. The internet companies like Google and Meta grew much more than the internet service providers.
Joe postulates that this time will be the same. In each of the prior GPT’s, the initial winners are the technology companies themselves. After that initial phase though, the biggest winners are the companies that utilize the new technology best. In this case the winners so far have been the technology providers like Nvidia, Microsoft, and Meta. In the next phase, the winners are likely to be the companies that can utilize AI best to generate higher revenues.
This was a very interesting take on AI that I had not considered before. I think it would be worth your time if you chose to listen to it. You can also purchase his book here.
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