The AI hype train is roaring down the tracks, and everyone's expecting a boom in productivity. But hold on! What we're seeing right now is an explosion in consumption, not production. And it's not just about current consumption, it's about anticipated future consumption. Investors are betting on how much money will be poured into AI in the years to come.
Think of it like this: the current AI boom is similar to the early days of the internet. Everyone was pouring money into building websites and infrastructure, but it wasn't clear how it would all translate into profits.
So, who's actually benefiting from this AI gold rush?
Right now, it's the companies providing the picks and shovels for this new gold rush – the hardware and energy providers. Think Nvidia and TSMC. They're supplying the powerful chips and resources needed to train these massive AI models.
TSMC isn't developing AI, they're manufacturing the tools to do it. It's like the textbook publishers who profit from mandatory education. Whether those textbooks create geniuses or couch potatoes in 18 years is irrelevant to them. They're making money now.
What about the actual AI companies?
Take Deepseek as an example. They've made their AI model open source. For programmers, this is huge. They can tinker with it, build on it, and create new applications.
But for the average person? The technical details don't really matter. It's like trying to understand genetic engineering by watching a few YouTube videos.
The key takeaway is this: Deepseek's open-source model and efficient hardware use are driving down the cost of AI development. This means investors can now demand more for less.
You might think this is a sure sign of a bright future for AI. And you'd be right. But that doesn't automatically translate to a booming economy. Why? Because economic growth relies on consumption. AI's economic value ultimately lies in how much consumption it generates.
Imagine this: you're used to paying $6 for six eggs. Suddenly, a new farm comes along and sells them for $1. You're still eating the same number of eggs, but the overall market for eggs has shrunk. This is what's happening with AI. The "cost" of developing AI is decreasing. This doesn't mean AI is useless, but it does mean the initial expectations of a massive consumption-driven boom might be tempered.
Here's another thought: imagine someone invents a machine that uses animal brains as CPUs. Suddenly, cats are powering our computers, and biological computers become the norm. No matter how advanced AI becomes, TSMC's stock would plummet.
We can't predict the future of technology. Remember when everyone said 3D shooter games were impossible? Then Doom came along and used clever tricks like raycasting to achieve it.
Who's to say there won't be an even more efficient model than Deepseek? If someone, whether it's a team in China or the Vatican, develops an AI that requires even less computing power, TSMC will feel the impact.
Conversely, what if a groundbreaking AI emerges that demands more computing power? Imagine an AI that can develop new technologies and requires massive resources to do so. TSMC's stock would skyrocket.
The impact of AI on consumption isn't always direct either. Imagine an AI that's incredibly persuasive and converts millions to Buddhism. The real winners would be the statue makers! Or an AI that encourages people to have more babies? Baby product companies would rejoice.
Deepseek's success or failure is almost irrelevant in the grand scheme of things. It's just one step in a long journey. There will always be a next step, and a next, and a next.
The AI landscape is constantly shifting. What matters is understanding the forces driving it and recognizing that the gold rush isn't just about digging for gold – it's about who's selling the picks and shovels, and how much everyone thinks that gold will be worth in the future.
