When there is an explosion of technological innovation, it is impossible to avoid trying to predict how it will turn out.
Is anyone right about what the future of artificial intelligence will be like?
Probably not.
Here are some of my current AI predictions around the world:
- I think we will see an explosion in new business formation.
- I think some sectors/roles will be materially affected, but most of us will be doing more work thanks to AI. We are a busy culture.
- I think many strange relationships will develop between humans and machines.
- I think AI will make some people smarter, but most people will become stupid due to skill atrophy.
- I think wealth inequality will get worse.
- I think AI will flatten the world in terms of economic opportunities.
This last one is already evident in some ways when you look at stock markets around the world.
This is no longer just a story about the Mag 7 or the Nasdaq 100. AI business has gone global.
JP Morgan’s Michael Harpsichord He compared a basket of Chinese AI stocks to a basket of AI stocks in the S&P 500:
Emerging markets are neck-and-neck with the Nasdaq 100 since the beginning of 2024:
It helps when you have two countries: South Korea and Taiwan1 — now makes up half the index, with returns like:
South Korea has increased by almost 180% in the last 12 months. Taiwan is up more than 100%. At the same time, the S&P 500 and Nasdaq 100 rose 25% and 34%, respectively.
These markets are heavily concentrated on stocks that are part of artificial intelligence development; SK Hynix, Samsung and Taiwan Semiconductor account for more than 20% of this country’s stock markets. The US stock market may seem concentrated, but stock markets in other countries are much more heavily weighted.
China also increased by almost 60% last year. Japan increased by 28%. Thailand increased by 41%.
I don’t know if it will last like this. There was a major reversal in many of the hottest markets on Friday.
But the US stock market was the only game in town for more than 10 years. This is no longer the case.
Maybe America can continue to dominate the financial markets from now on, but it is also worth considering the possibility of artificial intelligence leveling the playing field.
It is also hopeful that this will encourage households abroad to invest more money in the stock market. Paul Kedrosky Here’s a chart showing the percentage of households that own stocks:
We hope that artificial intelligence will bring more people to the stock market.
Michael and I talk about global AI trade and much more in this week’s Animal Spirits video:
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Further Reading:
Winners Write the History Books
Now here’s what I’ve been reading lately:
Books:
Podcast book tour:
1Those numbers were even better before South Korea fell 14% and Taiwan 7% on Friday.
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