Surviving "The Age of Extremes"

Research evidence excerpt

Surviving "The Age of Extremes"

balance sheet vehicles and circular 2

investments, these estimates are likely understated and more unstable. 2. 1

0 1 2 3 4 5 6 7 8 9 10But, it is also true that adoption rates are faster than in other technological

breakthroughs, with latest estimates of annualized AI revenues at ~US CanalDotcommaniaboom RailwayAI boom mania Roaring 20s

$175bn, already covering ongoing expenses and clearing depreciation

Source: BIS; Macquarie Global Strategy

hurdles, and scaling 3x faster than other recent IT waves. Subject to circular

flows, rapid demand escalation is also showing up in US$2trn contract Relative Performance SPX vs

backlog and data centers, with memory and logic accounting for 60%+ of NASDAQ

likely costs. 3. At the same time, AI, though significant in market and GDP Relative Performance of S&P 500 vs NASDAQ

growth terms, remains a relatively small part of broader economies, even as 105.0100.0

it threatens unemployment and declining marginal utility and compensation 95.090.0

85.0of labor. These factors are not yet in stats, but are already evident in lower

hire rates, declining education premiums and societal polarization. 4. Finally, 80.075.0

investors need to absorb erosion of pricing power and commoditization 70.065.0

of LLMs and, ultimately, chips, as China does to AI what it has already 60.0

Dec-14 Sep-15 Jun-16 Mar-17 Dec-17 Sep-18 Jun-19 Mar-20 Dec-20 Sep-21 Jun-22 Mar-23 Dec-23 Sep-24 Jun-25 Mar-26

accomplished in solar, EVs and batteries. On Friday, while still lagging, China's

Z.ai and Tulongfeng matched cyber security features of Mythos. Estimates Source: Bloomberg; Macquarie Global Strategy

indicate that US lead might be down to ~10-15%, which given China's lower

Maginificent Seven vs SPX ex