Andrew Zatlin: Time for an AI Pause?

Nvidia’s earnings report last night measured a new headwind blowing up against the big AI stocks.

Don’t panic.

At least, not yet.

Yes, growth is slowing down. What can you expect when you have 50% growth happening year over year over year?

At some point in time that stops.

We’re seeing the first signs of that with Nvidia reporting a slowdown in AI server revenues – but that’s hardly reflected in the market price yet.

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Nvidia’s market cap is already more than that of all UK stocks, and is now closing in on the market cap of all of Japan!

However, when everything has already priced this massive, massive growth rate and it needs to be readjusted, you got revaluations.

That’s normal. To be expected.

That’s also why big tech companies can post great growth numbers, even as they’re moving to reduce their employee headcount.

And that’s kind of where we are right now in the AI world, whether it’s Nvidia or Palantir.

Think of it as a highway. The highways have been built and they’re continuing to be built, but the bulk of it is out there. Now. It’s all the businesses at the off-ramps. It’s all the shopping centers, all the movie theaters, all the things that superhighway enables all those services. That’s where we are right now.

All of these secondary businesses are going to grow.

Not a moment of panic, but you should beware the AI trend, as Sam Altman noted, it’s bubbly.

From the hardware perspective, we’re more on the down slope of growth, heading more towards the 20%, 25%, and away from the 40%, 50% levels. And that means some new pricing reevaluations.

An AI pullback will trigger associated pullbacks in the coming weeks.

But we’ve got the rate cut potential impact further out, which should cause AI stocks to trend even higher going into the end of the year.

~ Andrew Zatlin

P.S. from Addison: That insight from Andrew Zatlin is just a small appetizer for the main event: our discussion on Grey Swan Live! shortly.

We’ll cover how Andrew views the labor market, why he’s been more accurate than other forecasters – garnering the #1 ranking on Bloomberg – and look at how his views fit in with many of the potential Grey Swan events we see occurring in the months ahead – including the possibility of a “most terrifying bull market.”

It’s another Grey Swan Live! you won’t want to miss – all part of the incredible value our members enjoy week after week.

If you’re not a member, click here to join now and get access to every Grey Swan Live! (including a recording of today’s Zoom), Special Reports and more.

P.P.S. We’re also hosting a free live tax seminar on how to keep more of your gains with IRS-compliant strategies tomorrow, August 29, at 1 p.m. ET. Registration is free and easy — reserve your spot here.

If you have any questions for us about the market, send them our way now to: Addison@GreySwanFraternity.com.

Nvidia’s earnings report last night measured a new headwind blowing up against the big AI stocks.

Don’t panic.

At least, not yet.

Yes, growth is slowing down. What can you expect when you have 50% growth happening year over year over year?

At some point in time that stops.

We’re seeing the first signs of that with Nvidia reporting a slowdown in AI server revenues – but that’s hardly reflected in the market price yet.

Turn Your Images On

Nvidia’s market cap is already more than that of all UK stocks, and is now closing in on the market cap of all of Japan!

However, when everything has already priced this massive, massive growth rate and it needs to be readjusted, you got revaluations.

That’s normal. To be expected.

That’s also why big tech companies can post great growth numbers, even as they’re moving to reduce their employee headcount.

And that’s kind of where we are right now in the AI world, whether it’s Nvidia or Palantir.

All of these secondary businesses are going to grow.

Not a moment of panic, but you should beware the AI trend, as Sam Altman noted, it’s bubbly.

From the hardware perspective, we’re more on the down slope of growth, heading more towards the 20%, 25%, and away from the 40%, 50% levels. And that means some new pricing reevaluations.

An AI pullback will trigger associated pullbacks in the coming weeks.

But we’ve got the rate cut potential impact further out, which should cause AI stocks to trend even higher going into the end of the year.

~ Andrew Zatlin

P.S. from Addison: That insight from Andrew Zatlin is just a small appetizer for the main event: our discussion on Grey Swan Live! shortly.

It’s another Grey Swan Live! you won’t want to miss – all part of the incredible value our members enjoy week after week.

If you’re not a member, click here to join now and get access to every Grey Swan Live! (including a recording of today’s Zoom), Special Reports and more.

If you have any questions for us about the market, send them our way now to: Addison@GreySwanFraternity.com.

Bitcoin isn’t a trade and trying to time it with chart patterns generally does not work.

I’ve never really felt like technical analysis carried much real predictive edge in general and when it comes to BTC, I’ve seen too many failed “death crosses” to change my opinion.

The one that just triggered in mid-November as bitcoin flirted with $90,000 is just the latest.

What really matters? It’s a monetary regime change – if market participants are trading anything it’s getting rid of a currency (“it’s the denominator, stupid”) for a store of value – and we’re seeing it in spades with Bitcoin and gold.

White-collar hiring is, in fact, slowing. Engel’s Pause is taking hold of the jobs picture.

In the meantime, everyday Americans are rediscovering an ancient truth: there is wisdom in wearing steel-toed boots.

Jobs that struggle to attract bodies in boom times are now seeing stampedes of applicants.

– Georgia’s Department of Corrections: applications up 40%.

– The U.S. military: reached 2025 recruiting goals early.

– Waste management staffing: applications up 50%.

For now, economists call this “labor market tightness.” Anyone who has ever scrubbed a grease trap knows it by another name: fear.

Bitcoin has historically weathered 30%+ corrections while still in a bull market.

Global liquidity fears and lower odds of a Fed rate cut in December are driving bitcoin and other cryptos lower at present.

As Andrew Zatlin described on Thursday’s Live! we can expect a series of stimulus efforts next year, ahead of the midterms, driving new liquidity. The $2,000 “tariff rebate” checks President Trump has been touting are but one example.

When higher liquidity hits the market – in whatever form it takes – today’s bitcoin buyers will be waiting.

Make like the whales, and use market selloffs and stimulus to your advantage.

The market seems to know something about private credit that we don’t. And in a big enough liquidity event for private credit, investors will have to sell off more liquid assets if they want capital.

That’s the danger private credit poses today, exactly at a time when rules are being eased to make it easier for retail investors like us to buy into this asset class.

I’m in the camp that this smells like a way to keep the party going by providing another source of liquidity – the passive investment flows from your regular 401(k) contributions. The smell takes on a sour note as this sector starts to falter.

Perhaps today’s selloff is simply a reaction to declining interest rates, the growth of private credit, and a few inevitable deals that have gone sour recently.