Already a subscriber?There’s something inherently dumb about the US corporate reporting cycle, which requires many of the biggest companies in the world to deliver their results to the market every 12 weeks.
“This is different from every other technology transition that I’ve been a part of over the last 30 years. Historically, we’ve always had a very cheap solution replacing a very expensive solution. Here, you have a very expensive solution that’s meant to replace low-cost labour. And that doesn’t even make any sense from the jump.”
Covello sees a similar problem. “We’re a couple of years into this, and there’s not a single thing that this is being used for that’s cost-effective at this point,” he says.“I think there’s an unbelievable misunderstanding of what the technology can do today. The problems that it can solve aren’t big problems. There is no cognitive reasoning in this … we’re not even in the same zip code of where this needs to be.
Covello doesn’t necessarily disagree. He says a spirit of FOMO is driving spending by corporates on the hot new thing, and they’ll be prepared to fund AI experiments while corporate profits are healthy. He also says the massive investment in AI infrastructure will continue for a while yet, and investors should continue to hold the beneficiaries of this spending boom.
Analysts expect tech sector earnings to grow 30 per cent, but actual growth rates are running at 20 per cent.