Less Pessimistic than Citrini, NVDA, LLMs, Optics, Software and Space stocks earnings

It’s probably not a proper Weekly to not start with some color on Citrini’s piece that sank everything the past Monday. Kudos to Citrini for his piece, which was very well written. The issues discussed are ones we have frequently discussed in our LLM Series since last year, though we never presented such a grand narrative. However, as we have already laid out in X earlier, we are not as pessimistic mainly for two reasons:

• Productivity improvements actually cause the demand reduction mentioned by Citrini. Demand reduction driven by productivity improvements is a special economic scenario, and most of it can be offset by macro policies, unlike other demand-reduction scenarios.

• l After working hours decrease, humans will have a significant amount of time for consumption and entertainment. You cannot assume that AI will replace all friction and consumption; humans would become vegetables. Imagine the lifestyle patterns of people who now have plenty of free time: they spend more time on short videos, games, and shopping. In reality, we need to refer to the economic systems of Norway and Saudi Arabia, which may be highly similar in the future. When profits increasingly concentrate at mega companies, systems similar to Norway’s and Saudi Arabia’s oil systems or sovereign wealth fund systems will emerge. More transfer payments will be distributed to people in the form of high welfare benefits. Human working hours will continue to decrease, but consumption time will continue to increase.

Also, there are numerous discussions on policy lags. We actually don’t expect a “gray rhino” scenario.