AI wipeout amidst broad market strength: what is the takeaway?

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Today’s Links

Software as a service trainwreck from the AI threat.
That was the huge news item on Tuesday’s session after a lot of pressure on these companies. Here’s a bit on why Claude’s Cowork has triggered some of the decline in these companies. And here is another one on the domain specific “plug-ins” for Cowork. Finally, here is Stratechery on the degree to which Microsoft is threatened by AI on the general angle of whether AI can disintermediate all software.

Match of the ages: G&R vs. Doomberg on oil & gas outlook
The last research piece from Goehring & Rosencwajg, the investment manager and research house, has the team updating their models on output potential for US shale oil and shale gas. If they are correct, we could be in for interesting times for US shale gas prices in the coming year to three year time frame as export demand and demand from AI data center growth risks colliding with lack of supply growth. Their models and outlook clash directly with Doomberg’s more outspokenly cornucopian outlook on the abundance of energy as far as the eye can see.

Some (great!) thoughts on AI
A thoughtful and left-leaning observer weighs in with balanced thoughts (also against reflexive leftist observations) on AI itself as well as how he uses AI and the various pro- and con arguments for its future. My favourite observation and how I see it for me personally as well: “it’s very nice to have a tool that enables you to do a lot more of what you want to do than you could before.” Amen!

Enough copper for our ambitions?
Copper supply potential is a very high hurdle for our ambitions to electrify everything. Ore grades are very low

Total portfolio approach (TPA) - a white paper
It’s important we all understand the tectonic shift among large institutions as most shift away from fixed allocations to various asset classes to the new Total Portfolio Approach - here’s a white paper from Alliance Bernstein with a catchy title (HT FTAlphaville). I haven’t wrapped my head around TPA yet - have only observed a total disconnect in the way the bond market behaves now versus the first 90% of my not very short career.

SpaceX IPO - don’t buy it for the data centres in space?
Also HT FTAlphaville - some compelling and very basic arguments why data centers are set to remain earthbound for a long time yet.

Chart of the Day - Our AI basket

I never rebalanced this one as I intended, but the breakout in the performance of the individual names since inception and over the last day and last week show that not a single AI-adjacent name escaped the selling over the last week, which saw the entire basket deflate -13.7%. Below is a chart of the basket’s (even-weighted, price only) return since just before we created it on September 11 - now having gone full circle and slightly in the red at -0.6% after having being up as much as 15% early last week.