"Does technological success automatically translate into rising stock prices?" has historically been the most common trap for investors. However, in this singularity, for a crucial reason, the stock price of the dominant player is highly likely to follow a J-curve. In the early days of the internet, thousands of startups proliferated, dividing the pie. However, the situation is completely different now. If the internet was a decentralized technology, AI is a centralized technology. The capital gains of the AI cycle are monopolized by a tiny inner circle of companies. The AI race is a game that requires massive capital, data, and power. The barriers to entry are so high that the top predators monopolize the entire market. While technological advancements are enjoyed by all humanity, the resulting financial benefits are abnormally concentrated in a small number of companies. These companies' profit surpluses increase exponentially. The cost collapse of cognitive capabilities means that for companies, costs converge to zero while margins diverge to infinity. Stock prices are ultimately the sum of future earnings, so if earnings follow a J-curve, so too will stock prices. Money flowing into the market isn't directed toward common manufactured goods, but toward rare assets. As the currency depreciates, stock prices follow a J-curve, leading to a nominal price increase.
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Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
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