One Overlooked AI Trade
Submitted by QTR's Fringe Finance
I’ve long admired Harris Kupperman, the founder of Praetorian Capital, for his ability to cut through noise and spot big-picture themes before they become consensus.
He has a knack for finding opportunities where others aren’t looking, blending a sharp macro perspective with a pragmatic investor’s mindset.
In his latest, he writes about an overlooked AI trade. I know my subscribers will benefit from his perspective and wanted to share it with you all this morning.
An Overlooked AI Trade
If you’ve spent any amount of time on Twitter, you’ve likely come across the hypothesis that AI will bring an extinction level cataclysm for white collar workers. Instead of having junior employees bothering upper-level management with their; lack of experience, contemporary pop culture references, and a strange fixation on maxxing, senior management will replace these nuisances with a swarm of AI agents.
These agents will accomplish all the grunt work previously done by younger employees, freeing up senior management time for boomer pursuits–like scrolling Reddit. The result will be some combination of endless layoffs, social malaise, and massive youth unemployment. Played forward a few years, there’s a fear that joining the middle-class will be unattainable for the youth. Instead, they’ll join the “Permanent Underclass.”
You can either agree with that view or disagree. Maybe AI lives up to its hopes, and maybe it’s a big flop. My view is somewhere in-between, though I expect plenty of disruption to the workplace, as corporates gain efficiencies with AI, offset by whatever new careers are created by the advent of AI.
What matters to the theme I’m about to discuss, is what the youth think about their own prospects—which are admittedly quite dim if they remain on the traditional path of a four-year college degree that trains them to be an office drone.
Since my last posting on datacenters, a few hundred billion has been spent on additional capex, and monthly revenues are now clocking in at a few billion—most of which is round-tripped between a handful of players. I remain convinced that the economics of AI datacenters are deeply negative. I am also convinced that the hyperscalers will continue to build them anyway.
For that matter, I have witnessed AI continue to advance at an impressive rate. While there are frustrating episodes of hallucination and error, AI has become indispensable to my investment process, and I think that...(READ THIS FULL COLUMN HERE).
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