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.

Relative strength, or RSI, provides investors with a quick glance as to how much the market likes or hates a given asset. The correction is a welcome event for hard asset investors.

With the metal back under $4,000, our thesis remains untouched.

In fact, the pullback – while sharp and severe – makes gold a less expensive insurance policy against geopolitical shocks and other Grey Swan events.

On the current trajectory, online and offline tribal warfare, with events that range from assassinations to riots to sabotage, is inevitable. Worse still, with both sides waging moral warfare (good versus evil), there is no middle ground, rendering compromise impossible.

To avoid this, the government could step in to crack down on illegal immigrants, serial criminality, and activist blue cells to slow the ramp in extrajudicial violence from the red tribe. This would reduce the chance we see a rapid escalation in tit for tat violence. However, to do this, it would need to designate many activist groups as terrorist entities and pursue them with the degree of vigor we saw with Islamic radicals after 9/11.

We’ve been watching private credit all year — the $3 trillion shadow banking machine that promises “nimble lending” but operates in the dark. Think of it as the modern heir to subprime mortgages: a system that works beautifully until it doesn’t.

According to Moody’s, U.S. commercial banks now hold $300 billion in loans to private credit firms, up from just $100 billion a decade ago. That’s more than 10% of total bank lending — and it means the “non-bank” lenders aren’t so non-bank after all.

When banks lend to private funds, which then lend to companies like First Brands, the risk just loops back into the same system regulators thought they’d insulated after 2008.

Hedge funds have gone all-in on semiconductor stocks.

Relative strength, or RSI, provides investors with a quick glance as to how much the market likes or hates a given asset. The correction is a welcome event for hard asset investors.

With the metal back under $4,000, our thesis remains untouched.

In fact, the pullback – while sharp and severe – makes gold a less expensive insurance policy against geopolitical shocks and other Grey Swan events.

When banks lend to private funds, which then lend to companies like First Brands, the risk just loops back into the same system regulators thought they’d insulated after 2008.

Hedge funds have gone all-in on semiconductor stocks.