Michael Jensen @GenesisGains: "Hello everyone, AI Was Supposed..."

Denmark

Hello everyone, AI Was Supposed to Kill Inflation. Instead, It May Be About to Fuel It. For months, Wall Street sold the dream that artificial intelligence would slash costs, replace workers, and create a new era of productivity-driven disinflation. But markets may slowly be realizing something uncomfortable: AI is becoming extremely expensive. The newest generation of models requires enormous computing power, massive energy consumption, and constant cloud spending. In some cases, companies are quietly discovering that replacing humans with AI actually costs more than keeping employees. That changes the entire narrative. Unlike the industrial revolution — where machines became cheaper over time and lowered production costs — modern AI behaves differently. Most companies don’t own the infrastructure. They rent it. Every prompt, calculation, code generation, or AI-assisted task creates another bill. More usage doesn’t necessarily mean lower costs. Sometimes it means higher costs at scale. That matters because markets are currently priced for an AI utopia while ignoring the growing side effects: • exploding energy demand • rising infrastructure spending • weaker free cash flow • lower buybacks and dividends • and potentially more inflationary pressure instead of less Even some major companies are already slowing or reconsidering parts of their AI rollout after realizing the economics are not nearly as attractive as first advertised. At the same time, geopolitics continues to simmer beneath the surface. Yesterday’s market rally was a perfect example of how fragile sentiment has become. A widely circulated “Iran deal breakthrough” headline briefly sent oil sharply lower and stocks soaring — only for the story to later unravel amid accusations the report had been fabricated or heavily distorted. Yet despite the denial, markets largely held their gains. That tells you everything about current psychology: investors desperately want bullish headlines, especially with several enormous AI-related IPOs potentially approaching in the coming quarters. Keeping optimism alive matters. Meanwhile the real backdrop remains far less comfortable: • tensions around the Strait of Hormuz remain unresolved • strategic oil reserves continue falling • diesel and transport costs stay elevated • bond yields remain under pressure • and housing is beginning to crack under higher financing costs The strange part? Almost nobody seems hedged for downside risk anymore. The market is behaving as if geopolitical tensions, sticky inflation, rising energy prices, and stretched valuations simply no longer matter. History usually punishes that kind of confidence eventually. And perhaps the biggest irony of all: The same AI boom that pushed markets to record highs may ultimately become the force that drains liquidity, pressures margins, increases power consumption, and keeps inflation hotter for longer. Wall Street expected an efficiency revolution. What it may have built instead is the most expensive productivity upgrade in history. Have a great weekend everybody Mike $NSDQ100 $SPX500 $NVDA (NVIDIA Corporation) $TSLA (Tesla Motors, Inc.)

Not investment advice. The author may have financial interests in the mentioned instruments.