Great Rotation Trade: Investors Shift Funds from AI Giants to Defensive Stocks Amid Concerns Over Sustainability and Power Supply

Silicon Valley, California, USA United States of America
China is investing in alternative energy for its national grid and data centers for hosting computing facilities near power sources and AI customers.
Equity investors are selling off shares of AI giants and buying defensive stocks due to concerns over sustainability and power supply.
Investor concerns include the rapid advances in AI leading to electricity demand outpacing available supply, causing a transformer shortage.
Investors are projected to pour $60 billion a year into developing AI models but the need for thousands of new services is dubious.
Major tech companies such as Microsoft, Amazon, Oracle, and Tesla continue to increase their AI investments despite concerns.
Morgan Stanley estimates end-user companies adopting AI will see an average boost of 27% this year due to productivity gains.
Some experts caution against the hype surrounding AI investments, calling it 'A.I. pollution' or 'noise'.
Great Rotation Trade: Investors Shift Funds from AI Giants to Defensive Stocks Amid Concerns Over Sustainability and Power Supply

In recent news, there have been significant shifts in investment trends as equity investors sell off shares of artificial intelligence (AI) giants to purchase lesser-known stocks and defensive companies that had previously lagged behind. This trend, known as the 'Great Rotation Trade,' has gained momentum due to concerns over the sustainability of gains made by AI leaders.

According to reports from Bloomberg, investors are increasingly concerned about the rapid advances in AI and its potential impact on electricity demand and power supply. The surge in tech industry electricity demand is outpacing the available supply in many parts of the world, leading to a shortage of transformers that deliver electricity from generators to users.

China has been at the forefront of adding alternative energy to its national grid, with an annual percentage increase leading the way. Data centers are another area of investment as they provide land for hosting computing facilities close to both power sources and major AI customers. Morgan Stanley estimates that shares of end-user companies adopting AI will see an average boost of 27% this year due to productivity gains.

However, some experts caution against the hype surrounding AI investments. Neuroscientist Erik Hoel refers to A.I.-generated dross as 'A.I. pollution,' while physicist Anthony Aguirre calls it 'noise.' These concerns have led some investors to question the long-term viability of AI investments and the potential for a bubble.

Despite these concerns, major tech companies such as Microsoft, Amazon, Oracle, and Tesla continue to increase their AI investments and use Nvidia products. Meta CEO Mark Zuckerberg has been acquiring a large number of Nvidia chips for AI development. Nvidia's revenue has tripled for three consecutive quarters and is expected to double in the current period.

Investors are projected to pour $60 billion a year into developing AI models, but the need for thousands of new services is dubious. It remains to be seen whether these investments will pay off or result in a bubble.


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Confidence

85%

Doubts
  • Are productivity gains from AI adoption truly worth the investment?
  • Is the transformer shortage a significant concern for the future of AI investments?
  • Will China's alternative energy investments be enough to support growing demand for power in data centers?

Sources

80%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

Investors Are Suddenly Getting Very Concerned That AI Isn't Making Any Serious Money

Futurism News Site Description and Analysis Report 2021 Update Victor Tangermann Saturday, 27 July 2024 17:18
  • Unique Points
    • An increasing number of investors and analysts are expressing concerns about the massive investments being made in AI, warning of a potential bubble.
    • Google’s second-quarter earnings failed to impress investors due to razor-thin profit margins and surging costs related to training AI models.
    • Capital expenditures for AI development are expected to exceed $49 billion this year, a significant increase from previous years.
    • Google CEO Sundar Pichai argues that underinvesting in AI is riskier than overinvesting.
    • Investors are expected to pour $60 billion a year into developing AI models, but the need for thousands of new services is dubious.
  • Accuracy
    • ]An increasing number of investors and analysts are expressing concerns about the massive investments being made in AI, warning of a potential bubble.[
    • Capital expenditures for AI development are expected to exceed $49 billion this year.
    • Investors are expected to pour $60 billion a year into developing AI models.
  • Deception (30%)
    The article contains selective reporting and sensationalism. The author quotes several experts expressing concerns about the potential for an AI bubble, but does not provide any counter-arguments or perspectives from those who believe that the investments in AI are worthwhile. The title of the article itself is sensational, implying that investors are 'suddenly getting very concerned' about AI without providing any context as to why this is a new development. Additionally, the author uses emotional manipulation by quoting experts warning of potential 'massive bubbles' and comparing the current situation to past tech crises.
    • An increasing number of Silicon Valley investors and Wall Street analysts are starting to ring the alarm bells over the countless billions of dollars being invested in AI,
    • We do expect lots of new services... but probably not 12,000 of them,
    • Despite its expensive price tag, the technology is nowhere near where it needs to be in order to be useful,
  • Fallacies (100%)
    None Found At Time Of Publication
  • Bias (95%)
    The author expresses concern over the potential for a bubble in the AI industry due to excessive investment without clear monetization plans. He quotes several experts and analysts who share this concern and provide examples of high costs and lack of revenue. The author does not express any bias towards or against AI, but rather reports on the concerns being raised by industry insiders.
    • ]Despite its expensive price tag, the technology is nowhere near where it needs to be in order to be useful[.
    • Site Conflicts Of Interest (100%)
      None Found At Time Of Publication
    • Author Conflicts Of Interest (100%)
      None Found At Time Of Publication

    92%

    The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
    (Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

    A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

    Opinion | H​ow Long Will A.I.’s ‘Slop’ Era Last?

    The Name Of The NZ Prefix. I PWA NZI.P.Was Dropped. David Wallace-Wells Wednesday, 24 July 2024 16:46
    • Unique Points
      • Neuroscientist Erik Hoel calls A.I. ‘A.I. pollution’
      • Physicist Anthony Aguirre refers to A.I.-generated dross as ‘noise’
    • Accuracy
      • A.I. investments might be three times as large as expected returns according to Barclays analyst
      • Investments in A.I. were running short of projected profits by several hundred billion dollars annually according to Sequoia Capital analyst
      • The cost of A.I. infrastructure build-out over the next several years is estimated to reach $1 trillion by Goldman Sachs head of global equity research
    • Deception (100%)
      None Found At Time Of Publication
    • Fallacies (90%)
      The author expresses skepticism towards the current state and future potential of A.I., using phrases like 'A.I. pollution', 'noise', and 'dross'. He also mentions several instances of inaccurate information generated by A.I., such as false trending topics or incorrect answers to Google searches, which could be seen as an appeal to fear or a dichotomous depiction of A.I. However, the author does not make any explicit fallacious arguments and provides evidence for his claims through examples.
      • ]One increasingly intuitive answer is 'garbage.'[
      • The neuroscientist Erik Hoel has called it 'A.I. pollution,' and the physicist Anthony Aguirre'something like noise' and 'A.I.-generated dross.'[
      • We can also read that geologists advise eating at least one rock a day, that Elmer's glue should be added to pizza sauce for thickening and that it's completely chill to run with scissors.[
    • Bias (100%)
      None Found At Time Of Publication
    • Site Conflicts Of Interest (100%)
      None Found At Time Of Publication
    • Author Conflicts Of Interest (100%)
      None Found At Time Of Publication

    99%

    The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
    (Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

    A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

    Great Rotation Trade Sees Investors Dump AI Giants for Less Obvious Stocks

    Yahoo Finance Sangmi Cha, Saturday, 27 July 2024 17:21
    • Unique Points
      • Investors are selling AI giants to snap up smaller stocks and defensives that had lagged behind.
      • The surge in the tech industry’s electricity demand is outstripping the available supply in many parts of the world.
      • Transformers, which help deliver electricity from the generator to the user, are in such shortage that if you order one today, you will be lucky to receive it in 2028.
      • China has led the way in terms of the percentage of alternative energy added annually to its national grid.
      • Data centers are a play on the need for land to host computing facilities that are close to both power sources and major AI customers.
      • Morgan Stanley estimates shares of end-user companies adopting AI will see an average boost of 27% this year as resulting productivity gains help lift their results.
    • Accuracy
      No Contradictions at Time Of Publication
    • Deception (100%)
      None Found At Time Of Publication
    • Fallacies (100%)
      None Found At Time Of Publication
    • Bias (100%)
      None Found At Time Of Publication
    • Site Conflicts Of Interest (100%)
      None Found At Time Of Publication
    • Author Conflicts Of Interest (100%)
      None Found At Time Of Publication

    83%

    The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
    (Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

    A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

    Tech's splurge on AI chips has companies in 'arms race' that's forcing more spending

    CNBC News Kif Leswing Thursday, 25 July 2024 12:00
    • Unique Points
      • Meta CEO Mark Zuckerberg has been acquiring a large number of Nvidia chips for AI development.
      • Nvidia's revenue has tripled for three consecutive quarters and is expected to double in the current period.
      • Microsoft, Amazon, Oracle, and Tesla are among the companies increasing their AI investments and using Nvidia products.
      • Nvidia gets over 40% of its revenue from those four major tech companies.
    • Accuracy
      • Google CEO Sundar Pichai argues that underinvesting in AI is riskier than overinvesting.
    • Deception (30%)
      The article contains selective reporting as it only reports details that support the author's position about an arms race in AI chip spending. The author quotes Mark Zuckerberg and Sundar Pichai expressing concerns about overinvestment in AI, but does not mention any counterarguments or alternative perspectives. The article also implies that Nvidia is the primary beneficiary of this spending trend without providing any context about other potential competitors in the market.
      • Nvdia’s revenue has more than tripled for three straight quarters and is expected to more than double in the current period.
      • But he sees little choice.
      • Meta CEO Mark Zuckerberg has been assembling a large stockpile of Nvidia chips, spending billions of dollars so his company can develop and train advanced artificial intelligence models.
    • Fallacies (100%)
      None Found At Time Of Publication
    • Bias (100%)
      None Found At Time Of Publication
    • Site Conflicts Of Interest (100%)
      None Found At Time Of Publication
    • Author Conflicts Of Interest (100%)
      None Found At Time Of Publication

    77%

    The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
    (Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

    A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

    This week's tech selloff shows Wall Street is getting nervous about businesses betting the bank on AI

    Fortune Media Inc. Verne Kopytoff Friday, 26 July 2024 00:00
    • Unique Points
      • SpaceX's Falcon 9 rocket has been cleared for a return to action by the Federal Aviation Administration.
      • Epic Games removed Fortnite from Samsung’s Galaxy Store in protest at Samsung’s decision to no longer allow sideloading of apps and due to Google’s proposals to restrain competition in the Android app distribution market.
    • Accuracy
      • Wall Street is getting nervous about businesses betting on AI for a quick profit.
      • Google's second-quarter earnings failed to impress investors due to razor-thin profit margins and surging costs related to training AI models.
      • Despite Alphabet’s better-than-expected earnings, its shares fell 6% this week.
    • Deception (30%)
      The author expresses his personal opinion that most companies are still in the early stages of deploying AI and wider rollouts will take time. He also mentions that most financial benefits from AI will likely come much further down the road. This is an example of selective reporting as the author only reports details that support his position, implying a quick payoff for AI was initially believed by Wall Street but now it's clear that it won't happen as soon as expected.
      • Despite Alphabet’s better-than-expected earnings, its shares, as of mid-day Friday, had fallen 6% this week.
      • Most companies are still in the very early stages of deploying the technology and wider rollouts will take time.
    • Fallacies (85%)
      The author makes an appeal to history in stating that tech transformations take time and that AI is no different. However, this is not a fallacy as it is a valid point based on historical evidence. The author also uses the phrase 'over the longer term' which implies that he acknowledges there may be initial setbacks or delays before the benefits of AI are realized. This does not constitute a fallacy as it is an accurate reflection of his perspective. However, there are some instances of inflammatory rhetoric used to describe Wall Street's behavior towards AI investments, such as 'nervous', 'cringed', and 'defend their big spending'. While these words may be descriptive, they can also be seen as emotionally charged and potentially biased. Therefore, I would score this article a 85 due to the presence of some inflammatory language.
      • Wall Street started worrying that the expected AI utopia may not materialize as quickly as initially believed
      • Investors cringed
      • It's a good bet Mark Zuckerberg, Satya Nadella, Andy Jassy, and Tim Cook will also have to defend their big spending on everything AI
    • Bias (100%)
      None Found At Time Of Publication
    • Site Conflicts Of Interest (100%)
      None Found At Time Of Publication
    • Author Conflicts Of Interest (100%)
      None Found At Time Of Publication