Year-End AI and Market Outlook: From Reflation to the Next Productivity Boom

Name: 2026 Outlook: The AI → Physical World Inflection
Uploaded: 2026-01-04T16:49:50.939444+00:00
Channel: Jordi Visser
Description: Summary and key takeaways on Year-End AI and Market Outlook: From Reflation to the Next Productivity Boom, covering Introduction The speaker wraps up the year

Jordi Visser

Jan 04, 2026

•

4 min read

YouTube video ID: qgSxccU0uWk

Source: YouTube video by Jordi Visser — Watch original video

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Introduction

The speaker wraps up the year with a rapid review of recent AI news, market moves, and macro data. He stresses that AI has moved from a speculative buzz to a practical necessity for individuals, families, and businesses, especially as schools lag behind.

Market Performance Overview

Equities: S&P 500 returned ~16% (price only) – the weakest positive year in seven years; Nasdaq (NDX) matched its 2020 level.
Commodities: Gold posted its strongest year since 1979, driven by a reflationary environment. Copper rallied, reflecting rising industrial demand.
Fixed Income: The dollar weakened, the yield curve steepened, and the Fed is expected to cut rates again next year.
Bitcoin: After two years of >100% gains, it fell 6% in the final quarter, leaving sentiment low but still offering a tactical edge for the speaker.

GDP, Productivity, and the Reflation Narrative

Q3 real GDP surged 4.3% annualized, the highest since the early 2000s, while job creation was essentially flat for two quarters.
Historical comparison (via Gemini) links this pattern to the 2003‑04 post‑dot‑bubble recovery.
The combination of high nominal GDP growth (≈8% quarterly) and zero hiring suggests a productivity boom driven by AI‑enabled automation.
With gas prices at $2.83 per gallon and the Fed likely to ease, inflation is expected to remain sticky but manageable.

AI as the Engine of Economic Change

AI is now the primary driver of corporate capex and GDP growth; traditional labor‑intensive sectors are seeing job displacement.
Enterprise adoption of AI agents, edge‑device upgrades, and “bring‑your‑own‑generation” (BYOG) power solutions are creating a new hardware‑centric growth cycle.
The speaker’s firm (22V) is building a “Colossus” GPU cluster (target: 1 million GPUs) to support this wave.

Investment Themes and Asset Outlook

Physical‑World AI: Edge devices, automotive AI, NPUs, and data‑center expansion are the core themes for 2024‑25.
Commodity Super‑Cycle: Copper, gold, and industrial metals are rising alongside AI‑driven demand.
Sector Picks:
Semiconductors: Lattice, Qualcomm, Micron (up >400% YTD).
Chemicals: DuPont – poised for a boom due to advanced packaging.
Healthcare: Eli Lilly and biotech firms benefiting from AI‑accelerated drug discovery.
Transportation: Delta Airlines and Tesla (robotics & autonomous driving).
Crypto: Bitcoin is expected to outperform in a reflationary regime; Ethereum’s outperformance signals strong network effects.

Bitcoin, Crypto, and Market Regime

The current environment mirrors the rare periods when gold, equities, and risk assets rise together – a classic reflationary regime.
Bitcoin’s fundamentals (weak dollar, steep yield curve, real‑asset outperformance) align with this regime, making it a top‑performing asset despite a quiet 2023.
Technical note: Bitcoin has been below its 50‑day moving average for 64‑65 days, a historically bullish signal when it finally breaks above.

Risks and Geopolitical Concerns

AI‑related job displacement could trigger political backlash, especially around mid‑term elections.
Geopolitical flashpoints: Taiwan‑China tensions remain the highest‑impact tail risk.
Capital‑intensive AI projects: Over‑investment could strain balance sheets if revenue growth stalls.
Power‑generation constraints and metaverse‑related profitability are secondary concerns.

Skills Imperative and AI Adoption

Andrej Karpathy’s viral post (“I’ve never felt more behind as a programmer”) underscores the urgency for all workers—and especially students—to integrate AI daily.
The speaker advocates a habit‑based approach: daily prompt engineering, Socratic questioning, and probabilistic thinking (inspired by Annie Duke).
Health‑tech angle: monitoring HRV and bio‑feedback is presented as a personal‑productivity framework that pairs well with AI tools.

Tools, Models, and Practical Strategies

Market Immune System: A turbulence model built in under two hours using AI‑sourced code; flags correlation/volatility shifts before S&P moves.
Prompt Engineering Playbook: Detailed examples (e.g., Socrates mode) for extracting structured reasoning from LLMs.
Research Deliverables: Weekly thematic papers, equity screens, and AI‑focused newsletters (via Substack) aimed at both retail and institutional audiences.

Outlook for 2024

Expect a global reflationary boom: commodities, equities, and crypto rise together.
AI will shift capital from pure software to hardware‑heavy, edge‑device ecosystems.
Investors should prioritize AI‑enabled hardware, industrials, and commodities while maintaining exposure to Bitcoin as a hedge.
Continuous AI adoption will be the differentiator between winners and laggards in both the workplace and the market.

AI has moved from hype to a fundamental productivity engine, driving a rare reflationary regime where commodities, equities, and crypto can all thrive. Embracing AI daily—through habit, prompt engineering, and strategic investing—will be essential for staying ahead in the coming economic cycle.

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(NDX) matched its 2020 level. - Commodities: Gold posted its strongest year since 1979, driven by

reflationary environment. Copper rallied, reflecting rising industrial demand. - Fixed Income: The dollar weakened, the yield curve steepened, and the Fed is expected to cut rates again next year. - Bitcoin: After two years of >100% gains, it fell 6% in the final quarter, leaving sentiment low but still offering a tactical edge for the speaker.

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Full Transcript YouTube

back for uh another year.
Quiet ending of the year as always, but
uh there was a lot of stuff that
actually happened in the last couple
weeks in the AI space uh both on the
news front in terms of posts and X and
also uh some deals that were done. So,
I'll go through all of that as well as
just kind of go through a wrap-up, go
through some of the themes for this
year, and I'll finish up with uh
basically uh a recognition from my front
in terms of where we are with AI. I
think the progress that has been made in
the last 3 months in terms of making it
something that you can no longer wait
for uh based on how much you can do with
it. Uh, and more importantly, I think
for, you know, people my age with your
kids, I think it's a necessity to uh get
them more involved, especially since the
school system doesn't seem know know how
to do uh deal with it yet. So, I'll go
through all of that and uh hopefully
leave you guys with a lot to think about
on multiple fronts. First of all, S&P
finished the year or so with all the
bubble talk. Basically, we ended up
about the same as we did in 2020 in the
COVID year, but you can see this was not
some kind of freakish year. We finished
up uh 16% in terms of price returns
before dividends for the NDX,
the you know, the beta part of the
market. It was uh the worst positive
year we've seen uh over the last seven
years. So, uh definitely not showing uh
bubble land. uh Russell
minor positive you know 11% nothing big
I expect bigger performance next year
the headline story was gold gold had its
biggest performance since 1979
uh and not by a little bit it was a a
very very very good year for gold
especially voljusted
Bitcoin uh sent the way sentiment ended
you'd think it was a crash but after
backto back 100 plus or 125% % plus
years. Uh it finished down 6%. Everyone
hates it now. Sentiment is low.
Technicians hate it. I love it. Um I
loved it last year, so take it for what
it's worth. Uh but I'll go through a lot
of the the reasons why, at least from a
uh a tactical basis. forget the
long-term story where I believe people
are just not putting into context what's
happening with the financial guard rails
and the disruption from AI but let's
just focus on the tactical side ended up
at the highest level of the year in
terms of the AI net so it's no longer a
situ situation where the market is
negative where we had been the entire
year uh basically if you look at the
zero line we spent most of the year
below if you take an average it was one
of the worst years and it was definitely
the worst year adjusted for the fact
that we were up. Uh I'm treating this as
coming out, believe it or not, of a
recession year where the cyclical
upswing is coming. Uh we'll we'll get
more into that as we go on. I think the
big news for the end and something that
uh you know, you may not have seen, but
GDP came out
uh for Q3 and the
result was 4.3%. Here it is out here.
Only one economist uh basically was even
close. Uh so you had a very very big
move. And I think more importantly
this 4.3 comes after a 3.8.
So what I wanted to do in seeing that
real GDP coming in that high basically
4% over a twoarter average nominal GDP
went back to the highest level since 23.
And again, this is when inflation was on
the higher end. So, we had nominal GDP
go up, but inflation in Q3 was not uh
accelerating. And so, basically what I
did is I went into Gemini and asked it
to go find out how many times in history
we've had backtoback
uh
quarters of at least 3.8%
since uh I guess this century. So, one
of them obviously the COVID rebound
where we had a bunch of big numbers.
Then you had the midcycle boost in 2014
and before that you got to go all the
way back to the beginning of 0304 coming
out of the dot bubble and then you had
the pre.com bubble. So,
the most likely period or the one that
chatpt or Gemini gave us as the most
likely period. Uh it's most structurally
similar to 20 uh 2003 to 2004. I'll go
through the reasons why as we go through
this, but one of the things that's
unique
uh about this is the fact that we just
did this two quarter run with no job
creation.
So, I want you to put that into context.
We grew 4% a quarter, which has really
only happened uh three times this
century,
and we had zero job creation during the
two quarters. So, if you're looking for
something in there that tells you this
time is different and as investors and
as macro people, you have to spend the
time understanding how to put this into
context and what it means. And there are
not many times in history where you can
find no job creation at the same time as
nominal GDP coming in at an annualized
8% in the quarter, real GDP over two
quarters coming in at 4%. So, uh, you
got that and then you also have the fact
that we've got for next year still two
rate cuts built in. So, the Fed is still
going to be cutting rates because of the
job picture, but also because of the
inflation picture and gas at the pump is
now down to 283, the lowest level since
2020. And basically, we're right in
where we were from 2018 to 2020 in terms
of the midpoint of the range. without
gas at the pump going higher, it's going
to be really hard for the Fed to be
raising rates. And anyone who's worried
about inflation, I think should just sit
there and say that we are probably going
to have a reflationary boom where
inflation will be sticky. Uh but if
we're not going to see a change in the
payroll numbers, and I don't see how
they're going to get better with AI, uh
and AI agents coming in front of us. So,
we'll talk more about that.
productivity. Uh Dennis and the team at
22V basically highlighted it well. We
are starting to get more and more of the
productivity conversation and I think
this is going to accelerate now. Mark
Andre started to uh talk about it and
the fact that we got 4.3 Elon Musk
doubledigit growth is coming within 12
to 18 months. If applied intelligence is
proxy for economic growth which it
should be tripledigit is possible in 5
years.
I just want you to take into context
this whole double-digit growth and
what's going on. Even though I don't
think that is coming, I do think the
period you're looking at here with the
ability of replacing labor or not hiring
people as topline
revenue, in this case, nominal GDP grew
8% in the quarter and yet we have no
hiring going on. So think about that in
terms of the productivity boom. If this
compounds then you can theoretically get
to numbers that are insane. So just keep
it in the back of your mind because it's
not a joke. Uh copper moving higher. So
for anyone questioning whether where we
are in a reflationary boom copper
accelerating into the end of the year.
MCI World X the US which is my proxy for
global liquidity and kind of a global
boom closing on the highs of the year.
The dollar after you know a bounce from
what were you know a very weak beginning
part of the year is in a downtrend again
posting its worst year since 2017
with Fed cuts coming the yield curve
steepening all of these on suggesting
the same thing the Cosby closing Dr.
Cosby, Dr. Copper, you've got everything
kind of moving higher. In Korea, export
growth posted backtoback big quarter or
big months to finish out the uh uh or
sorry, quarters to finish out the year.
And to show you the importance of South
Korea from an export, this is
year-over-year exports. The white line,
this is the US PMI.
We're going higher in terms of all of
these fronts. You also had Taiwan
exports which again another proxy for
PMIs blowing out to the upside.
Capital goods, we got the durable latest
durable goods report. Capital goods new
orders non-defense X defense uh X air
at levels historically equivalent with
close to 60 PMIs. We just continue to
march higher. The diffusion index, this
is from macro micro. I thought this was
a good chart just highlighting the
global PMI diffusion. So again,
diffusions a diffusion on top of a
diffusion. So think of this again as a
second derivative again implying higher
levels. This is using it versus global
monetary policy. I've shown charts like
this before. We are doing rate cuts and
so not a surprise if you've watched my
videos. Uh next year to me the number
one theme is connecting AI into the
physical world. So my outlook paper for
this year, long one with a lot of the
themes that I think are going to be
important to support PMIs not only going
higher this year but the beginning of a
mega a mega trend on the back of
commodity strength on the back of
enterprise using edge devices, edge
device upgrades for cars, auto or cars,
phones, computers, uh the NPUs that are
going to be necessary for the embodied
AI, humanoids coming behind it, the data
center buildout, the bring your own
generation BYOG power trend that is in
place. All of this stuff fits into the
physical world. I'll be putting this out
22V. If you guys haven't reached out to
22V, get signed up. There's a lot of
things I'll show at the end in terms of
what I'm going to be doing on top of
just the written work now, but giving
you specific names in the space,
uh the thematic ideas within there, some
of the ones I mentioned, but you get the
picture. So for all of these, including
the BYOG side, uh, which is becoming a
bigger and bigger theme, solving most of
the power problems, uh, I think it's an
important thing to get up to speed on.
Colossus 2 is going to be, uh, up and
running completely. There's more work
going on on building out Colossus to get
it to its eventual ending of a million
GPU cluster. All of this stuff is going
to be important. uh p one podcast to
reference for this week. I did listen to
facts versus feelings. I do from time to
time. The reason I cared about this one
were twofold. One is just wasn't a lot
of podcasts out the last couple weeks of
the year, but uh Ryan Dietrich did have
on two technicians. Uh and I thought
they did a good job. I like technicians
at the end of the year because I like to
look for charts that are pointing a
direction and then try to figure out
what it means together. that has gotten
a lot easier with artificial
intelligence. Uh my number one thinking
partner on this stuff, which again I'll
show you at the end. Uh this is going to
be a big year for teaching whoever wants
to learn how to be able to do this stuff
I do. But also, I don't think you have
time to wait anymore because I think
we've reached a point where the
capabilities of artificial intelligence
have compounded at such a fast pace now
that when I show you what I've been able
to build in a matter of of hours uh on
things that I had team of data
scientists that were never able to
finish for me, not because they weren't
capable, but because of how difficult it
was for me to give what my brain wanted
and get them to be able to do it. That
merging together of thought
collaboration is what has happened with
AI which allows you to do this stuff and
kind of get your answer go back get your
answer go back. So with the podcast what
I did is I just said take all of the
charts that these two technicians talked
about and let's break them down in terms
of what went on. So they talked about
financials
talked about long decade sideways
assets. I've shown some stuff from John
Rog. I'll go through a bunch of charts
same way. these long-term bases we are
breaking out of. This is the PMI side.
Uh a lot of these long-term bases are
even longer. They're commodity stuff
going back. That's the hardware verse
software. You have hardware verse
software. All of those multi-de decade
sideways things which really haven't
worked since 2003 to 2004. Uh I think
you're in the beginning stages of it.
They talk about gold what it means
especially when it's happening with
stocks going higher. And they highlight
another fact which is the market breath.
So when you take all of those together
and you go look at gold having rising at
the same time as cyclical strength with
breath improving with junk bonds strong
equities making new highs. These are the
only time periods that you found where
you could have gold going up alongside
of risk on assets but in particular with
inflationary type or reflationary assets
reflationary not recessionary global
growth boom. So these are the periods
that's bringing up. Same thing shows for
the breath. And again,
usually another 12 to 24 months using
history even though they only have a
couple of them. So what regime are we
most likely in?
Well, financials breaking out. Early
cycle reflation theme. Multi-deade
sideways poised to break out. Commodity
super cycle beginnings. Global nominal
GDP accelerates faster than expected.
Real assets dramatically outperform
financial. This is never a recessionary
regime. It is a global reflation regime.
So then you go through what does it
normally mean? And again I just showed
you copper's going higher. Nominal GDP
is accelerating, equities are going
higher, gold's going higher, financial
conditions are easing, we've got the Fed
cutting rates, the dollar is weakening.
This is all part of what normally goes
on during it. what we would expect in
this inflation stabilizes but remains
above the pre-I error. This is not late
cycle stagflation. And again, I've
talked about this the amount of times
I've heard stagflation. All of these
things have kept people out of the
market. Bubbles kept people out of the
market. A full-scale reflationary
expansion where tech and commodities
rise together. This has only happened
twice in 60 years, and both were
extremely profitable multi-year cycles.
Climb the wall of worry. So, Bitcoin had
a horrible relative year and had a bad
year overall. How does Bitcoin or how
should it perform in this regime?
AIdriven global reflation, commodity
breakouts, financial strengthening,
breath expansion, and a weaker dollar.
Bitcoin should be one of the strongest
performing major assets in the world. I
will say it will be the strongest.
Thought the same thing last year. So
again, this is not advice. I'm putting
my money where my mouth is, but I pretty
much always do with Bitcoin because my
long-term view. The regime aligns almost
perfectly with Bitcoin's historical
environments. It loves a weaker dollar,
steeper yield curve. It thrives when
real assets outperform. Here is it
versus PMIs. I've talked about this.
When PMIs are rising, you get the best
time of Bitcoin. Doesn't matter if it's
a minor cycle or a bigger cycle.
Anything going on, it is typically very
sensitive to PMIs and altcoins
or let's just use higher beta uh crypto
and let's just take Ethereum as I'll get
into in a little bit uh as another part.
So, this is the perfect conditions for
S-curve adoption. This is something
critical. I've talked about this as my
network effects AI adoption and
decentralization equal the Bitcoin
narrative strengthening tokenization and
real world assets a big theme for next
year more onchain liquidity more money
inside the crypto world the digital
economy good for Bitcoin institutional
adoption is now structurally embedded
ETFs and custody rails all of this stuff
is the technology side of it should be
one of the best performing assets
and again reminder this is after it had
a quiet year but Again, if you take the
three-year performance, nothing has
beaten it. So, just use it for what it
is. I still believe this is what went on
last year. We continued into the end of
the year to see OG's selling. This to me
was just a representation again of what
makes sense ideologically, the people
that were early and went into it. You've
got the government more involved in
sponsoring it. You've got ETFs. This is
not the true decentralized ideological
breakaway from the fiat system. So
you've got those people bailing out. At
the same time, there's a new sheriff in
town in terms of where you can find a
five bagger or 10bagger. And Bitcoin's
not in the same class clearly as what's
been going on in AI. Micron Technology,
a very big asset, went from a low of 60
some odd to over 300. You're getting
moves like Palunteer and things. So it
lost a little bit of its relative mojo
as a beta asset and I think that took a
lot of people out especially uh people
that on the VC world went we had some
market maker issues towards the end of
the year. I think all of this was a
consolidation and I love the fact that
sentiment is dead and I'm love the fact
that I can't find one technician that
likes it at this point. Now, I posted
this on December 30th that we had closed
below the 50-day moving average for
64 days. Uh, it finished the year with
another three on top of it. We did close
above it on the first day of the year.
So, it had been 64 straight days or 65
at that point. Since 2020, that's only
happened four other times. So, we tied
this one from early this year. That was
obviously a major bottom before it went
higher. Not all of these ended up with a
major bottom that ended up going higher.
But I will show you the four points.
One, two, three, four. All of them were
at least short-term entry points. This
one got you a good rally. This one got
you a good rally, but none of these were
kind of the beginning of this. This one
here, you had to deal with some more
basing. But my main point in terms of
going through this was to highlight that
again
for me MSCI world x the US which takes
into account the non- tech world in
terms of the exus dominated by
commodities and things like that. At the
same time
when you have this going on this has got
a weaker dollar trend involved with it
as well. MCI world xus did outperform
last year to show the correlation
between it and bitcoin. Here is the 100
day moving average of both of them and
over time you can see Bitcoin has
diverged since the market making
incident and since we went down. So my
belief and the reason that I will not
listen to technicians on this and I will
still be buying into any dip that occurs
if there are any at the beginning of the
year is that liquidity is still
positive. My outlook in general for this
year is positive. There will be time in
the future where I'm not as positive on
the US side and I think Bitcoin can have
a correction but right now it is
swimming against the liquidity stream
and I think that means the snapback will
be violent just like the snapback here
which also occurred during the same
thing. Liquidity was going higher. I
believe the same thing is going to
happen this year. So we closed above the
50-day moving average first time. We'll
see what happens. Uh,
it wasn't the only one. Salana,
only time Salana had been below the
50-day moving average again came in
during the April period. We closed above
it again on the first day of the year.
We'll see what happens. What really has
me positive from a beta basis and what I
like happening related to the PMIs is
what's been going on with Ethereum
relative to Bitcoin. So we look at a lot
of relative uh positions in stock market
but very seldom will you see people look
at Ethereum relative to Bitcoin. Last
year during the upswing or when Bitcoin
was going higher really beginning from
2022 Ethereum was underperforming. The
fact that Ethereum is now going higher
at the same time that we're getting the
rise of acceptance for both stable coins
and tokenization to me means the
ecosystem network effects are kicking
in. I think you want to be positive on
Bitcoin because Ethereum is
outperforming. The network effects are
in place. Uh John Rog, who I show a lot
and I'll be doing a lot more work with,
I'm just showing this because he's got a
very different view. Um and he's saying
there's risk to six,000. He's also still
calling for lower levels uh in uh micro
strategy. I'm going to go against John
on this one, but on the rest of the ones
I'm about to show you, we're on the same
page. Uh this is some of his big bases
that again fit back in with the facts
and feelings situation. Croup a bank as
John likes to say and as I've shown on
here you do not get bearish the market
when banks are breaking out but in
particular a 16-year base in Croup. That
takes us back to the great financial
crisis. Banks are going higher.
Deregulation is kicking in. Freeport
Macaran
haven't taken out the highs yet since
again the great financial crisis. a big
base, but you also have a PMI base going
here. Major catalyst. I think copper is
going much much much higher on the back
of the needs that are associated with AI
and the buildout. Exxon Mobile again up
at the top end of the range. PMI base
here, long-term base. And again, this
happened with oil trading down to 55
this year. DuPont, there's going to be a
major major bull run in chemicals in my
opinion because of a lot of things that
I'll cover in terms of the Nvidia Grock
deal and just a lot of NPU packaging. We
are moving away from GPUs and we are
moving into advanced packaging
building out the next phase which is
edge devices. Chemicals will be a big
part of this as well. You've got heckla
mining. So the gold silver side breaking
out long base pneumont mining you got to
go all the way back to the 80s in terms
of breaking out.
Delta Airlines, I've highlighted
transports, another big PMI theme. All
of these are PMI themes. Eli Lily, I've
highlighted the advancement in terms of
the shift. So Lily fits into a different
category for me. I think healthcare is
going to be a surprising replacement for
a lot of tech this year in ter so
biotech and pharma as AI drug discovery
starts to repric and rerate this group
with higher multiples. Tesla, a big part
of the robotics and PMI theme for me.
John likes that one as well. He and I
have been on the same page on on this
back since it was about 3:30. Uh both
talking about it. And as I mentioned,
Tesla, no safety monitor in the car went
on December 24th with Elon Musk in it.
They're rolling it out for public rides.
And again, AI still I showed this last
week or two weeks ago, but in case
people didn't see it,
this is the biggest risk to the market
stability in 2026.
We've never seen a single risk score so
far ahead of the rest entering a new
year, says Deutsche Bank. And again, AI
bubble, you will be climbing the wall of
worry the entire time. uh eye on the
market, Michael Sembleis did a, you
know, a great uh report. I like his
work. I've highlighted before, but I
think he brought up a lot of charts and
tables that are worth looking at for you
guys in terms of the AI bubble. Uh and
again, what we've got here is just total
stocks. When you include all of the
direct AI stocks, the AI utilities, the
AI cap equipment, you're dealing with 42
stocks. Price return 78%.
S&P X those names 22%. So basically the
bulk of everything whether it's earnings
growth whether it's the capex so all of
this has been related to
AI not a shock but I just want to make
it in terms of uh spending how big this
is you got everyone kind of spending a
wasteful amount of time trying to say
how much of this economy is driven by AI
I keep saying it's almost all of it we
have no job creation if anything you can
see there's no job creation
AI is driving all of these factors at
this point. The Fed would not be cutting
rates. Uh if it wasn't for the job
situation, the job situation would be AI
is a deflationary force. It is a job
replacing force. It has societal
impacts. That will be a major risk is
going to be the backlash that comes
starting with the midterm elections. Uh
all of the things of trying to restrict
this buildout. you'll have probably a
lot of issues that pop up and risk that
scare the market this year. But the
reality is the ta the tech capex is
massive right now. If you combine all of
these and again these are in percent of
GDP so this is normalized Manhattan
project electricity Apollo project this
you're dealing with this you leave this
one out you're you're dealing about the
same size as all of them combined that's
how big the capex buildout is from a
valuation basis the reason I like
showing this stuff is because I wouldn't
say he's positive on the on AI but I
would say that he's pushing back against
the valuation side so if you've got a
negative view on valuation, you should
go spend some time looking the report if
you're worried about the debt situation.
He highlights that the debt is big
relative to what it was. But then he
honestly goes through and highlights
the net debt to IBIDA of so zero
indicates an excess of cash and
marketable securities. The majority of
the space has is just loaded with cash,
free cash flow to revenue ratios of of
uh of the AI companies. he goes to and
compares everything to the rest of the
market in terms of the Russell 3000. His
argument is this these none of these are
are are issues for now. If they grow
rapidly and we don't see the revenues,
but that's the same argument that Jim
Chenos make, which I agree with. If we
don't see the revenues in a year, you're
going to have trouble for these names.
They're still spending the money and as
long as they're spending the money,
you're going to see it flow through the
S&P 500. You're going to see it flow
through GDP. The question is, are you
going to get the benefits? I'm telling
you as a fact, the improvements in AI
over the course of the last 3 months
are impossible to describe. It is moving
so rapidly that if you don't use it
every day, all day, the entire day for
everything that you do in your cars,
everything. Go buy a new phone, go buy a
new car, talk to it all day long. In
both situations, I took a drive for
three hours going back out to New Jersey
over the course of the holidays. The
entire time I was on with Grock, I
didn't listen to a podcast. I literally
had a conversation. It was beyond
amazing for me to sit in the car and do
it. Michael Sembleis, his risks for
2026. Power generation constraints. I'm
less worried about this, but I do think
this can become an issue, even if it's
just the states pushing back. China
scaling the technology mode on its own.
This one, I think, is overblown. China's
approach to Taiwan geopolitical risk.
This one has the biggest tail. If
there's any
military fears on them invading Taiwan,
obviously that is the biggest one. This
one to me is the most likely, the
metaverse moment for Hyperscalar
Profits. Not that they're not going to
get the money, but if it doesn't
materialize as expected, it could become
an issue next year, particularly with
all the issuance that is going to be
necessary to get more money. So, I took
all of his risks. I put them into uh
chat GBT
Pro and I said, "All right, go through
these and give me your analysis. Give me
the outcome probability, worry
probability." So again, outcome
probability, what's probability it
actually happens? Worry probability,
what's the probability that you, the
investors, are worried about it. Look
how high those numbers are. the nar
dominant narrative probability market
impact and then so I just went through
highest volatility spike not surprising
is Taiwan most repeatable pain risk is
the ROI capex which I agree you can go
look at it on your on on your own
uh okay so for the final uh slides if
you haven't read this bring it up in
chat GPT I'm showing you the date you go
find it in X. But Andre Carpathy who's
who's arguably the most respected person
out there and who's been very very let's
say uh nonemotional on this whole
situation uh from mainly time at Tesla
but also at OpenAI uh just a phenomenal
wellrespected person within the space.
You can tell 15.6 million views. He did
an interview with Darkh back in October.
I received multiple hedge fund uh
reachouts saying that this was a
negative for AI. What was my opinion
where he basically said AGI wasn't
coming until for another decade and that
AI agents were way behind. Well, this is
what he put in. I've never felt this
much behind as a programmer. So, I want
you to remember, I've never felt this
much behind as a program. I have a sense
that I could be 10 times more powerful
if I just properly string together what
has become available over the last year.
So Andre Carpathy is number one doing
podcasts talking about AI in a negative
fashion. But then when he finally sits
down and takes the time to use it a lot,
I've never felt this much behind as a
programmer. Clearly some powerful alien
tool was handed around except it comes
with no manual and everyone has to
figure out how to hold it and operate it
while the resulting magnitude 9
earthquake is rocking the profession.
Roll up your sleeves to not fall behind.
I'm going to emphasize this point to all
of you because this is not just for
programmers.
This is for you if you're still going to
be in the workforce
and especially your children who are
about to enter the workforce. College is
not teaching them this stuff. They need
to be using it every single day. This
post by Carpathy went massively viral in
late December with over 15 million
views. It captures a pivotal moment in
the software engineering AI community
serving as a candid wake-up call about
how rapidly AI tools are transforming
programming. You have personal
vulnerability. You are giving up on 10
times productivity boost.
The times of India business insider
final express framed it as an open
letter to software engineers
highlighting the urgency of upskilling
and AI's rise. In essence, it's a
landmark acknowledging that 2025 marked
an inflection point where AI began
fundamentally changing what it means to
be a programmer, forcing a rapid
evolution in skills. The first order
effects, job refactoring, productivity
explosion. We get back to the GDP side.
We're going to get into the AI agents
tools like multi- aent systems
proliferate.
Enterprise adoption surges. This is
critical. When you get to this point
now, the enterprise adoption is going to
surge, which means the revenues for the
hyperscalers are going to surge. The
model producers are going to see it
surge because of agents and enterprise
adoption will go off. So, you're going
to see a big movement in the market in
this. the third order effects. And
again, if you guys aren't in it, second
order effects, third order effects. I
have a Santa Fe model um system thinkers
prompt that I use to basically take any
news item or any podcast or anything,
and get it taken out to the second and
third order effects. This is a critical
part that you should be using on
anything you have in your life,
regardless of what it is. I'm going to
go through some of the healthc care
stuff, some of the investing, but
anything where you learned if I do X,
what happens to Y and Z on the other
side? You have to start asking questions
like that. This is what it's good at. Uh
is the polymath side the ability of
looking at things from a system uh
systems thinker perspective.
Traditional software modes erosion. This
gets back into Salesforce. It gets back
into everything in there. The ability of
building apps on the fly.
Most move to data pipelines, proprietary
data sets like Tesla's driving data or
agent ecosystems.
We're in the mid transition. It was
hyped as a year of agents, but he noted
that they fully don't work yet. So now
we're getting into the point where the
path to recursive self-improvement.
He's still cautious, but he didn't
mention that in this particular one. But
potential for rapid pro uh progress
2027.
Jensen Huang, the most important thing
is you're not likely to lose a job to
AI, and I agree with that. You're going
to lose a job to somebody who uses AI.
So, I would recommend everybody do what
do what we do, which is use artificial
intelligence with our work and do our
jobs better. So, that brings me into
this. So, this year I will be launching
this. It'll be coming out in January. We
are just getting rid of all of the bugs.
You can see my name is spelled wrong
here. There's lots of little bugs that
need to be uh need to be finalized, but
the goal and part of it's going to be
not just this the research you can get
the stocks, the sectors, the themes, but
a big part of it is going to be the AI
side and just showing you how I do all
the things that I do and how you can
incorporate AI into everything that you
want to do. Whether it's cooking,
whether it's fantasy football, whether
it's health, whether it's whatever,
anything that you find fun that you do
on a regular basis where you've
historically used Google or books or
whatever. Uh I'm going to basically go
in and show you how to do this prompt
engineering, everything along those
lines. During the two weeks, Nvidia, and
I just want to bring this up because
this is kind of the way that everything
goes for me now and what I've set up. So
Gavin Baker goes through the Nvidia
verse Grock thing. I go out and write a
paper on it in terms of the importance
of it. The Nvidia Grock deal, why AI's
next frontier requires architectural
revolution over Moore's law. This was a
critical critical relationship build
between Nvidia and Grock. Um, it led to
and this is what I'll be doing for the
people who sign up and the institutional
clients of 22V. Basically, I have about
20 names that are associated with this
change. This is a change Nvidia is not
on the list. So this is a broadening out
related to the PMIs of moving into a
world where advanced packaging becomes
the dominant theme. Now this has huge
implications for variety. So the way
that I'm going through this and I'm just
giving you how do I go from a thematic
idea to an equity framework give you the
companies John Rogue put together the
score. If you don't know John's work his
his uh work for is uh is what you want
to be involved in in his work. It means
the trend is your friend. Um, so these
all have a Ford technical score. I go
through the earnings commentary and what
I'm looking for there is I've got an
algorithm which gives me the rankings in
terms of is this company's progression
in their earnings commentary showing the
strength where the management is getting
more optimistic as time is going on
related to the AI demand theme. So you
can see these are in there. Lattis
semiconductor continues to grow on this
and Qualcomm does. And then revisions.
So revisions are just are the analysts
on the street. So here you have
management, here you have the sellside
research, here you have technicals, and
here you have thematic ideas. It's a
broad picture. My goal is to be able to
provide you guys this uh for asset
managers, for separately managed
accounts, anything along those lines. I
will be putting all of this stuff
together. There's a lot of themes,
there's a lot of names, there's a lot of
way to screen. I'm going to be doing
this for a variety of people um based on
the ask, but also based on the fact that
I've set all these up. So Nvidia just
admitted the general purpose GPU error
is ending. I can't think of a more
critical period than kind of thinking
about this and what it means. It means
there's different names that are going
to work this year. Now at the same time,
why did Meta at the end of the year buy
Manis? What is the signal for your
enterprise AI agent strategy?
The Wall Street Journal marks said marks
one of the clearest signals yet that
large tech platforms are no longer just
competing on model quality, but on who
controls the execution layer of AI
powered work. We're getting into the
return on invested
capital. AI agents is the critical part.
Again, I talk about this in here in
terms of this with the names that are
going to benefit from the enterprises
needing to upgrade their systems. This
is a major major change. We are going
from the cloud. We are going to need to
have these on premise onsite. Everything
is on site. bring your own generation.
It is very physical. It is very hardware
driven. You're going to have a lot of
names that are going to benefit from
this. I'm now created another thing
which will be on the payw wall for my ex
trending stuff. So each weekend I will
go in and basically look for the
analysis of the most trending things out
there. The reason I wanted to show this
one. So this is from the final week. The
agentic and autonomous agents. So AI
agents is the theme you want to be
investing in. If you don't have 20, 30,
40 names related to the agentic side,
you got to start focusing on it. This is
not about data centers anymore. This is
not that's what that's what was up there
last year. It's not about the palunteer
stuff in terms of the data coming
through. You're getting a change in
what's there and the charts are showing
that the trend is changing. And like I
said, reflation is the theme and
reflation, you want to be less software,
you want to be more hardware. I created
a market immune system. This is
something that took me as I mentioned at
the beginning uh less than less than two
hours to build. I sat on my couch early
in the morning and I basically said you
know what I'm finally going to build my
turbulence model that I had asked my
data scientists to build for years. They
were more than capable of doing it. But
here's what was not easy. The way that I
did this, which you couldn't do back
then, is I sat there and I said, "I want
you to go to GitHub and I want you to go
find me the most highly rated
code out there for a turbulence model."
It comes back, it gives me this one. I
go through and now I have to choose the
assets. And the way that I wanted to
choose the assets, and this is always
what I believe when you're dealing with
something like a coariance matrix as a
warning system for the market. And
that's what I wanted. A market immune
system for me was basically something
that would tell me when correlations and
volatility were changing, especially
when the S&P was not yet changing
because I believe the market will always
show you the risk is moving before the
actual index was. I I use models like
this back in in Brazil. They were not as
sophisticated as this. So I gave it 100
assets, 99 assets. A good percentage of
them were related to AI because that's
what's been driving the market. But then
it also included things across stocks,
bonds, commodities, currencies, crypto.
When do they all start shaking at the
same time and what I end up getting is a
model that basically is measured this
way. The red line is where the
turbulence is. When the red line is
normally up high, these are ends up
being bottoms. So this is after
something has already trended. But at
the same time, when you get above this
line here, this is the warning system,
especially when the S&P is trending. So,
the last one where we got this where it
broke above it while the S&P was
trending higher and above its 50-day
moving average was here and we went
through a correction here. This has
typically and going back where the back
test is basically gives you a warning
signal of about 7 to 10 days. So, this
will be up on the payw wall as well. Um,
and I'll send it out occasionally uh on
the institutional side. And I just want
to remind you guys that for AI, you guys
have to spend the time on it. I think
the two best ways uh and this is why
I've done it this way are on the
investing side which is what I'm showing
you right now but the other one is HRV
for those of you who have Aurora rings
for those of you who monitor your heart
rate variability I'm telling you I've
spent more time on this this has been a
long journey for me this has been about
15 years of focusing on this concept
using meditation focusing on the
microbiome all of these different things
but if you don't know why it's important
if you want to be better as a parent, if
you want to be better at your job, there
is an element involved in this where the
balance between your evolutionary side
and your brain. So your body and your
brain, that is what it measures. And so
I've spent an enormous amount of time on
this. I'll be rolling this out in
Substack. My whole goal for this AI
training side in the analyzing things, I
approach things in this manner. It's a
complex system. So investing in health.
If you move one thing, if you change
your protein, it has an impact on your
fiber. If you do this, if you extract
something, everyone plays around with
these. They buy self-help books. They
buy things for investing. With AI, it
has to be a habit. This is the McCraven
side. There's a bet thing. Every
decision you're making under
uncertainty. This is the Annie Duke
side. Think with intelligence, dialogue,
not answers. AI is the collaborator on
all of this. You do not go for it like
Google. Too many people are looking for
solutions. It hallucinates. It does
this. It is not meant for that. It is
meant to help you make better decisions.
But to do that, you have to be thinking
with it and you have to be asking it the
right questions as you do it every
single day. That's what I was saying.
This has become so powerful for me and
this is what I'm going to focus on.
Habit comes before outcomes. Every
decision is a probabilistic bet. AI
works as the best collaborator, not an
answer, not an oracle.
I'm going to basically get you to get it
into a habit.
The goal is not being right. The goal is
making better bets repeatedly. That's
the Annie Duke philosophy. The
collaboration side, I can't I really
can't emphasize to you how much it goes
through. On the prompt engineering side,
what you're going to see is to give you
an idea of my prompts. If you just type
in and you go, "Hey, I want an answer
for this Ultraink reasoning optimize
operating contract." All I do when I ask
it a question of something that I want
is I'll put in what I'm trying to solve
for and then I'll type in I I'll paste
in this prompt which goes all the way
here. It's two pages.
If I want to do Socrates mode, your
child might be someone who doesn't raise
their hand in class, but if someone asks
them a question, they're fine.
This is the way you're not here. You you
literally put it in Socrates mode and
that way it asks you the questions.
Think about what a doctor does when it
says what did you have for lunch? What
did you have this? That's what Socrates
mode is. The process in one sentence is
show up daily, think in probabilities,
collaborate with intelligence in systems
that never stop changing. You have to do
this. Investing in health are the
easiest way in my mind. But if that's
not what you're interested in, I
guarantee you by reading the Substack
and by going in and and watching the
videos, whether it's cooking, whether
it's fantasy football, travel planning,
learning a new skill, anything, chess,
painting, whatever, career development,
any of those things, you will get the
answer for. You'll be better in terms of
thinking. If you're not using it now,
this is where you're going to be at the
end of anything involved with me. That's
how I got to where I am with doing these
videos and kind of showing you guys how
to go from podcast thematic ideas down
to stocks incorporating all the
information. Everything that I do there,
everything that I built, the whole
immune system thing, it was all done
basically verbally. And like I said,
driving out now anywhere New Jersey with
my kids going through this, I'm just on
Grock verbally. If you guys haven't
started to do it, you're missing out on
something big. The goal for this year
for all of you is to get you to the
point where AI is something you're
collaborating with, it'll bring more uh
power to you. And if you are focused on
the health side, I'm telling you, if you
take a journey with me, there will be
hundreds of things that you will learn.
Even if you're not focused on HRV, but
you're just focused on being happier and
getting a better balance in your life
between what your body is saying and
what your mind is saying. Trust me,
that's what the whole thing is about.
Happy new year to you all again. Thanks
for being here. Share the video. Do
whatever you need. Uh we're going to
reset for the year. We're going to make
some money together. We're going to be
up on the news together. And for those
of you who join me on an AI journey, I
promise you I will make you much more
powerful as an individual. And for the
younger people out there, uh our job is
to find a way to make sure that you're
prepared for what the world's going to
look like. I'll see you guys again next
week.