Reports of AI’s Death Are Greatly Exaggerated

Far from an AI-fueled selloff, we’re just getting started. August 29, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Reports of AI’s Death Are Greatly Exaggerated SEAN RING Dear Reader, Every other week, some new tech guru—or, worse, a wannabe tech guru—claims that artificial intelligence is on its deathbed. They say the age of AI is over. Move on. Nothing to see here. These prophets of doom, armed with half-baked theories and clickbait headlines, want us to believe that the most significant technological revolution of the 21st century is fizzling out like cheap soda on a Sunday afternoon. I just read the most enlightening LinkedIn post from Linas Beliunas, who’s been writing about AI for ages. Here it is (emojis are his, not mine): This is huge! Swedish FinTech giant Klarna is using AI to halve its workforce 😳 "Our AI assistant now performs the work of 700 employees, reducing the average resolution time from 11 minutes to just 2, while maintaining the same customer satisfaction scores as human agents," - Klarna CEO Sebastian Siemiatkowski wrote in his letter to shareholders. But here comes the crazy part. The financial impact of these AI-driven efficiencies is substantial. In their latest H1 2024 financials, Klarna just reported that average revenue per employee has surged by 73% over the past 12 months alone, from SEK 4 million to SEK 7 million 😳 As an effect, this productivity gain has allowed Klarna to reduce its workforce from 5,000 to 3,800 over the past year alone through natural attrition, with plans to potentially shrink further to around 2,000 employees in the coming years. It's now clear that this Bloomberg interview Siemiatkowski did a few months ago wasn't just hype - Klarna is walking the walk. AI is eating FinTech. AI isn't just alive and kicking—it's running marathons, winning gold medals, and then inventing new sports just for fun. The Current State of AI: Alive and Thriving Let's start with the basics: AI isn't dead. In fact, it's doing quite the opposite. It's surviving and, yes, thriving. The technology has advanced rapidly over the last decade, becoming as ubiquitous as Wi-Fi. Every industry worth its salt—from healthcare to finance, retail to transportation—is dipping its toes in the AI pool. And those that aren't? Well, they're just waiting to be disrupted out of existence. Consider this: AI is now helping doctors detect diseases once thought to be the sole province of seasoned specialists. Financial institutions leverage AI to detect fraud faster than a hedge fund manager can say "insider trading." And in case you've missed it, autonomous vehicles are no longer just the stuff of science fiction; they're an actual thing now, zipping around streets, albeit in controlled environments. If that's what dying looks like, I can't wait to see AI's idea of a full-blown resurrection. Misconceptions and the Usual Litany of Criticisms But alas, the naysayers won't be deterred. They always find something to gripe about. "AI is overhyped!" they shout. "It’s stuck in a perpetual loop of failure!" they lament. "It’s a threat to humanity!" they cry as they furiously type away on their smartphones powered by—you guessed it—AI algorithms. But mainly, they can’t wait until NVDA stock falls out of bed. “Short this!” - Jensen Huang (under his breath) Let's take a closer look at these so-called criticisms, shall we? First up is the claim that AI is all hype and no substance. According to these folks, AI is just another overblown fad, like pet rocks or bell-bottom jeans. They love to point to high-profile AI failures, like chatbots that go rogue or self-driving cars that don't drive all that safely yet. Sure, there have been setbacks. But newsflash: that's how innovation works. If every technological breakthrough were flawless from the get-go, we'd all be commuting in flying cars by now. AI has its challenges, but it's far from a failure. Then, there's the argument that AI is stuck in a perpetual cycle of failure. This one is a real hoot. Failure isn’t a bug; it’s a feature of progress. Remember when the Wright brothers crashed their planes? Or when Edison burned through ten thousand materials before figuring out the lightbulb? Failure is just success training in the gym. Counterarguments: AI is Just Getting Started Now, let's turn the tables and bring in some facts—real ones, not the kind cooked up in some basement think tank. AI is not just alive; it’s experiencing a growth spurt that would make teenagers blush. Recent breakthroughs in AI technology are nothing short of extraordinary. Take, for instance, generative AI—those clever little algorithms that can create new content from scratch. Whether writing poetry, composing music, or generating images that make you question reality, generative AI proves that machines can be just as creative (and sometimes as nonsensical) as humans. AI's rapid growth and potential should make us all feel optimistic and excited about the future. But it doesn't stop there. AI has become a cornerstone in natural language processing, with algorithms now capable of understanding and responding to human speech in ways that were unimaginable just a few years ago. Remember when you had to shout at Siri or Alexa just to get a weather update? Those days are behind us. Today’s AI can decipher accents, understand context, and even crack a joke—though, admittedly, its sense of humor still needs a bit of work. And let's remember machine learning, the bread and butter of AI. Algorithms are getting smarter by the minute, processing vast datasets and uncovering insights that humans would take centuries to figure out. Machine learning transforms industries and redefines what's possible, from predicting market trends to diagnosing diseases. So, Why Does the "Death of AI" Narrative Persist? With all this progress, you might wonder why some people are so eager to declare AI dead. Well, it's simple. Fear and sensationalism sell. No one wants to read a headline that says, "AI Continues to Grow Steadily and Will Eventually Solve Many of Humanity's Problems, But It’s Going to Take Time, and There Will Be Some Bumps Along the Way." No, people want drama. They want the fall of Rome, the bursting of the dot-com bubble, or the next big villain to blame for the world's ills. And AI, with its rapid advancements and occasional missteps, makes for a perfect scapegoat. There’s also a fundamental misunderstanding of what AI is and isn't. Some folks still think AI is a monolithic, singular entity—like Skynet plotting to overthrow humanity. AI is a collection of technologies with strengths and weaknesses, working together (and sometimes against each other) to solve specific problems. It’s not one size fits all; it's more like a Swiss Army knife with different tools for different tasks—horses for courses, as they say. And then there's the fear factor. Let’s face it: AI is spooky. It’s the ultimate boogeyman for a tech-obsessed world. It can do almost magical things, and humans have a long history of fearing what we don't understand. But just because AI is powerful and mysterious doesn't mean it's on the brink of collapse or rebellion. Remember, we’re the ones programming these systems. If anything, AI's so-called "death" would reflect our shortcomings, not some apocalyptic failure of technology. The Future of AI: A More Nuanced Perspective Instead of declaring AI dead or overhyped, how about we take a more nuanced perspective? Yes, AI has its challenges. There are ethical considerations to navigate, biases to address, and plenty of bugs to fix. But that's true of any transformative technology. The printing press had its critics, especially when it came to printing The Bible in the local vernacular. So does the internet, especially from governments who don’t like their secrets posted on the wall for all to see. And now, so does AI. The future of AI is neither a utopia nor a dystopia—it's a work in progress. It’s a road with twists, turns, bumps, and occasional potholes. But it's a road worth traveling. AI has the potential to revolutionize how we live, work, and interact with the world around us. It can improve our lives, jobs, and futures (especially when it comes to diseases humans couldn’t hope to manage without it). But it will require careful stewardship and oversight. Wrap Up So, the next time you hear someone proclaiming the death of AI, do yourself a favor: roll your eyes, shake your head, and maybe even chuckle a little. AI isn't dead; it's far from it. It’s evolving, growing, and, yes, occasionally stumbling. But isn't that true of all of us? In the grand scheme of things, AI is just getting started. And if you ask me, the future looks pretty darn exciting. AI’s death is one funeral that won’t happen soon. All the best, Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( Rate this email Like Dislike Thanks for rating this content! Looks like something went wrong. Please try to rate again. In Case You Missed It… King: Preserve and Grow Your Wealth With Copper BYRON KING As I’m sure you’re aware, we’re in the midst of another presidential election campaign. Plus, House and Senate races and whatever else is happening in your neck of the woods. You either follow the news or don’t, maybe because you’re sick of it all. But wherever you’re coming from, I promise… We will not discuss current politics, not here or now. Instead, we’ll discuss geology and copper, meaning the metal, and why it’s critical to your investment future. Look ahead five, 10, 15, and more years; copper is worth understanding. It’s also worth your investment dollars. That is, over almost any frame of reference — near-term, intermediate, or long-term — you can preserve wealth with copper, which offers limited downside for reasons I’ll explain in a moment. And you can grow your nest egg with copper too, again for reasons that I’ll lay out anon. But first, let’s take a brief detour to Arizona. The “Copper State” Over the past couple of years, I’ve made numerous trips to Arizona, often as not to check out copper development projects, copper mines, and old copper mining history. In fact, I was recently out there again, in mid-August, with temps well above 100 degrees. Yes, that’s hot, despite how people will tell you, “Oh, it’s just dry heat.” Yeah, right. Dry or not, it’s a freaking furnace outside in the mid-summer in southern Arizona. Still, there I was, in the field, shod in protective boots (note: carbon-fiber toes are far more comfortable than steel) and wearing long trousers, a long-sleeved shirt, a reflective vest, and a hard hat. I hiked through cactus, sagebrush, and mesquite, walked along roadcuts and railbeds, climbed around outcrops, tried to avoid rattlesnakes, kicked rocks or whacked them with a hammer, and talked about geology with several superb copper guys from both industry and academe. On the hunt for Arizona copper. BWK photo. And do you know what? It’s just so much fun; hey, I love it! Arizona is called the “copper state,” and for a good reason: the southern half is underlain by a complex geological assemblage of really old, pretty old, and kind of old rocks. These are all cut by fractures and faults, moved about by folding and other tectonic processes, and intruded by super-hot magmas and other deep-earth systems that, over long stretches of geologic time, emplaced a lot of copper into the rocks, along with much else in the way of minerals and metals. Here's a map that identifies many past and present mine developments for the metal to give you a feel for Arizona's copper systems. Courtesy University of Arizona. Note that there are no red “copper” dots in the north, in the Colorado Plateau region. This is an area of massive uplifts, which led to the Colorado River carving the Grand Canyon. And to the extent that there’s copper in the deep rocks, it has not (yet) been exposed by erosion. To be perfectly accurate, the lack of copper plays up north doesn’t mean that there’s no copper; in fact, the metal and its minerals are present in places in northern Arizona, but these are mostly smallish deposits of scientific and historical interest, and not large mineral systems and developments. Get down into the basement rock, and who knows what you’ll find. Also, to be perfectly accurate, this southern Arizona copper belt is part of a much larger set of continental-scale geologic trends, as you can see in this map. Courtesy University of Arizona. Geologically, there’s much going on in terms of mineralization in what looks like an arc from northern Mexico, in Sonora state, through southern Arizona, wrapping up through California and Nevada, and then into Idaho and Montana. And this doesn’t even begin to describe the known, very impressive mineral deposits and future potential in Utah, Colorado, and more. The point of all this is to focus on how the copper belt of southern Arizona is a region with significant uplift, plus extensive erosion over geologic time. In essence, this brought many formerly deeply buried copper deposits to the surface; or at least, in our time, close enough to prospect and discover. So, copper is important to Arizona. And if you know a bit more about the place, you might recall the other “Cs” of the state, aside from its red metal output. That is, Arizona is well known for cattle, cotton, citrus, and its wonderful climate in winter, far from the cold, wet, miserable weather back East. [U.S. Could Drop Next “Atomic Bomb” to End ALL Wars]( According to ex-CIA insider, Jim Rickards, America now has a powerful new “A-Bomb” that we may be forced to use on our enemies. This superweapon could spell disaster for Russia, China, North Korea or any other US enemy… And safeguard the lives of MILLIONS of Americans. [CLICK HERE for the Shocking Truth NOW!]( The State That Almost Wasn’t Pertinent to that last point, in the 1800s, Arizona’s dry climate worked against it in terms of what people back East thought. The common view was that Arizona was a vast expanse of austere, desolate Western desert, essentially a long stretch of nothing in particular except useless geography to cross over on the way to California. To be fair to people of that era, they worked with limited knowledge; and actually, there were understandable reasons for their negative views of Arizona. As in yes, Arizona was definitely dry, and that certainly was the case in the long-ago days before modern water projects and massive irrigation. At best, Arizona offered a physically challenging frontier life and lifestyle back then, including great danger from the tough-as-nails Apache who roamed the land. Indeed, for these reasons and through most of the 1800s, Arizona was considered unfit to be admitted as a formal U.S. state. But time marched onward, and during the late 19th century, the American West developed in its own way. For many decades, Arizona held the legal status of an American territory, little more than a national backwater. Except… the place had a lot of mineral wealth. From the 1850s through the 1890s, the U.S. Army went about its business out west, often not fighting the aforementioned Apache in Arizona. Observant soldiers noticed interesting, shiny minerals along the trails and rock faces along the way. The Army guys usually marked the locations on maps and brought specimens back to their camps and forts. To make a long story short, more than a few of these Apache-fighting soldiers transformed into the original prospectors of the late 1800s who, either on their own or with the help of better geologic talent, found immense scales of valuable minerals outcropping across southern Arizona. One of the original, and in retrospect legendary, mineral discoveries was at a place called Bisbee in the southeast part of the state. Geologic cross-section through Bisbee, Arizona copper deposits. Around and beneath Bisbee is a Jurassic-age assemblage of copper mineralization, along with silver, gold, and much else. The mineralization was high-grade and extensive. Many mineral specimens were stunningly beautiful, which led Arizona promoters to ship them across the U.S. and, indeed, the world. In this regard, Bisbee minerals played up the importance and wealth of Arizona. Bisbee malachite, azurite, cuprite. Almost immediately, museums and collectors across America and the world began to acquire Bisbee specimens. Today, you’ll find Bisbee mineral examples in museums from Tokyo to St. Petersburg and all across the U.S., from San Diego to the Smithsonian Institution. Another way of saying it is that, from a promoter’s standpoint, Arizona might be dry, and much of the landscape may look like a desert, but the place was also a gigantic source of primary wealth, per its mineral endowment. In no small part, this aggressive promotion of Arizona as a mineral district led to the territory becoming a U.S. state on Feb. 12, 1912. The rest is history. Copper, Then and Today Of course, preceding the massive discoveries in Arizona, America already had a copper industry. It kicked into gear in the 1840s based on excellent ore deposits in Michigan's Upper Peninsula. Still, Michigan or not, America’s growing national economy required more and more of the red metal. Based on new discoveries out West, certainly with that of Bisbee in the 1880s and then spreading across other finds in the Arizona territory, copper mining grew prolifically and became a key part of the U.S. national-scale industry. Arizona’s copper mines, mills, and smelters employed tens of thousands of people and fed copper into the late 19th and early 20th century U.S. economy. Along the way, innumerable people accumulated (and some lost) immense fortunes. Again, to make the point, America and the world needed copper during the country’s massive initial period of industrialization, as towns and cities grew along with the population and trends towards urbanization. More and more, and affecting almost everyone, people needed copper from household electric wire to telephones, house keys, doorknobs, plumbing and bathroom fixtures, and much else. American industry also evolved and developed in ways that would have been impossible without access to large amounts of relatively affordable copper. Consider obvious examples like the electric power industry, which requires copper at every stage, from steam turbines to dynamos and generators, as well as wires and transformers. You’ll find copper everywhere along the way, from the power plant to the utility hookup and then all through the house or other building. Just imagine the growing amounts of copper that went into everything from streetcar lines to steel mills, and if that’s not enough, consider the buildout of a national-scale telephone system. Think of the iconic American business names that never could have worked out absent copper, used in a myriad of products: companies like General Electric and Westinghouse, or AT&T, RCA, Ford, General Motors, Chrysler, and countless more. Business histories are filled with accounts of CEOs and boards of directors plotting their companies’ fate based on the price of copper. Really, when you open it all up, almost everything and every product uses copper. It’s as close as the wire in your house or place of work. Or the metal inside cars, trucks, trains, airplanes, ships, telephones, refrigerators, heating systems, air conditioning, building elevators, and on and on. Copper conducts the electricity that pumps water to your house or workplace and then pumps the sewage away. It’s all based on copper; the metal is everywhere. Along these last lines, and per the old saying, “water is life.” But take that a step further, pointing out that electricity is quality of life; copper is essential to conducting that electricity. What’s Happening With Copper? For all its importance to industry, however, copper has long been a cyclical business marked by booms and busts. Here’s a generalized view that goes back over a century, showing prices at the time (yellow line) and adjusted for inflation (blue line). The takeaway is that copper performed well after World War II and during the Asia buildout in the 1970s-80s. Also, look at how well copper performed during China’s expansion in the early 2000s. What the chart doesn’t show, though, is baked-in future demand growth for copper and inevitable shortages and price increases for the metal, all due to several reasons: - The world is already amid a general, copper-based electric power grid buildout from what we can label as “normal” growth as billions of people in the developing world move towards a better lifestyle. - There’s a companion, copper-based grid rebuild in the developed world, certainly here in the U.S., where the country requires a dramatic reboot of the overall power complex, much of which goes back to the 1930s. - We are fast moving towards a dramatic new increase in copper demand, in the U.S. and globally, to move electricity for applications that didn’t exist just a few years ago. In particular, this comes from demand growth in the areas of artificial intelligence (AI) and the ongoing move to power more and more new cars with electricity versus petroleum-based fuel. Of course, there’s much more to the copper growth story, but for reasons of space, we’ll leave it at that. Meanwhile, it’s fair to say that the mining industry has lagged for many years in terms of exploration, discovery and investment in new copper mine projects. And this affects not just current supply, but future output. In other words, we’re staring down the barrel of strong worldwide growth in copper demand, but limited supplies. Part of the reason for the lack of past investment was economics, in terms of weak or unsteady copper prices and unfavorable economics to finance new mines. Another angle has been the evolution of resource nationalism worldwide, namely the increasing difficulty in obtaining exploration concessions, social licenses, and permits to go out and explore. This issue is present in most nations across the globe. To sum up, at the root, it’s not easy to explore, develop, and operate in many regions and jurisdictions. (Long story.) Back to the Future… of Copper This brings us back to the beginning and explains why copper is a solid investment idea now and for many years to come. The downside is limited, in the sense that prices are firm as we look to enter a time of higher demand and weaker supplies from mines and mills. The upside is apparent in a world where copper prices have been solid and are clearly getting stronger. It means that good, well-run companies will make money, impress Wall Street, and maintain dividends. At this point, I must give a shout-out to one of the world’s great copper mining companies, Freeport McMoRan (FCX). Currently, shares trade in the $45 range, giving the company a market cap of over $62 billion. And it pays a dividend of about 1.8%. Of interest and pertinent to this article, Freeport is a new version of the old Phelps Dodge Company, which, for many decades, owned and operated a series of mines. It is now closed at the aforementioned Bisbee site in Arizona. Of course, Freeport has expanded over the decades. It runs mines in Arizona, elsewhere in the U.S., and overseas in Peru, Chile, and Indonesia. The company produces copper, gold, silver, and other minerals and metals. And in a rising market for these metals, Freeport looks good in the years ahead. Another company in the copper space is Rio Tinto (RIO), whose shares are trading now at about $63 and have a market cap over $100 billion. Rio pays a dividend of over 6.5% yield, reflecting how it generates cash in this environment. Rio operates in the U.S. and Canada, including owning the massive copper project at Bingham Canyon, Utah. It also holds a solid interest in one of the best undeveloped copper plays in North America, at a site called Casino in the Yukon, where Rio works with Western Copper & Gold (WRN). Rio is far more than copper, though. It mines iron ore in Australia, smelts aluminum in Canada, extracts zirconium in South Africa, and much else. The company has deep technical expertise in various geological and engineering settings and is again looking forward to meeting world needs in the period of strong demand that is unfolding. I follow the companies, and I’m always looking for news. If you buy in, use limit orders, look for down days in the markets, and never chase momentum. And with all that, I thank you for subscribing and reading. Best wishes, Byron W. King Contributing Editor Rude Awakening ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. 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