Zach Nelson

[unusual_whales @unusual_whales]

"AI isn't paying off in the way companies think. Layoffs driven by automation are failing to generate returns," per FORTUNE.

[Brandon Carl @brandonjcarl]

Documenting the headwinds I now see for AI.

It won't seem like it, but I love AI and am long-term positive. But when "math doesn't math" I take note.

1. The core thesis for foundation model lab investment has been high upfront investment made worthwhile by significant long-term profits.

2. These are capital intensive businesses and the compute commitments are very high relative to revenue and require strong growth over long time periods. The "leverage" (commitments versus revenue) is extremely high.

3. The fundamentals are not as positive as they previously were:
• Input costs are higher (commodities, chips, power)
• Interest rates are higher
• Competition is more intense
• Scaling Laws are now problematic: exponential costs/power cannot continue

4. Forecasting compute spend is challenging and high risk due to (a) revenue uncertainty and (b) algorithm uncertainty

5. Revenue growth appears to be slowing. The technology is valuable, but ROI is proving to be more expensive and take longer than anticipated.

6. The future is likely "different models for different use cases" with the lower end of the market being highly competitive.

7. Core use cases such as agentic software engineering are likely to need approaches beyond next-token prediction. They are Σ₂ᴾ complexity problems requiring multi-objective optimization and likely a combination of Transformers and other methods.

8. Current forecasts in memory makers are built largely on quadratic attention. That will not persist: we are already seeing work from DeepSeek, Minimax and Nvidia that can cut RAM needs by 80% or more.

9. This means semiconductor valuations are substantially overinflated and will go through the traditional glut versus shortage cycle.

10. For foundation model providers: lower costs with competitive differentiation is good. However, lower costs with a lack of differentiation would mean lower revenues. This makes it harder to (a) service commitments and (b) pay back investors.

11. Leverage is substantially higher than in previous cycles, evidenced by leveraged ETFs, call option activity and margin loans. Korea is particularly susceptible.

12. 0DTE options create a profile that has stronger parallels to portfolio insurance and 1987 than any other point I can remember.

13. The combination of exponential increases in call activity coupled with the ties of semiconductors to structured products means there is a non-trivial systemic risk to the financial system.

14. Implied earnings growth rates are inconsistent with other periods in history.

15. Macroeconomically we cannot and should not fund exponential cost increases. History has shown us repeatedly that there are better ways (see Quick Sort and Simplex).

16. Significant supply is hitting the market via IPOs.

––

Taken together: costs and competition are increasing while revenue growth is likely slowing. Valuations are fragile and prone to technology disruptions that are already here. Systemic financial market risk is extremely high.

[NewsWire @NewsWire_US]

Microsoft Bans Claude Code After AI Costs More Than The Humans It Replaced

[Libs of TikTok @libsoftiktok]

BREAKING: UK Police release bodycam footage of Henry Nowak’s arrest and m*rder

You can see Henry struggle to breathe as he tries to tell the officers he was stabbed. They dismiss his pleas, cuff him, then read him his rights as he's dying in front of them.

These officers belong in prison!

[Charlie Bilello @charliebilello]

The Fed expanded the money supply by nearly $9 trillion under Powell.

Inflation has averaged >4% per year over the past 6 years.

Powell's explanation? It was nearly all due to rolling “supply shocks" over which the Fed has no control.

The truth: this inflation was made in Washington as it always is - from too much government borrowing/spending and too much government creation of money.

[Ted Cruz @tedcruz]

How could you not vote for this guy?

[Hedgeye @Hedgeye]

🇺🇸 U.S. Consumer sentiment falls to lowest reading on record

[Spencer Pratt @spencerpratt]

Nithya and Karen Bass are living in LaLa Land with their unserious fantasies about the homeless drug addict crisis. They both want the multi-billion dollar scam to roll on forever.

[Barchart @Barchart]

Semiconductor Stocks are now trading above their 200-day moving average by the largest margin since the Dot Com Bubble Burst 🚨🚨🚨

[Cem Karsan 🥐 @jam_croissant]

How does dealer positioning move markets independently of macro events?

I'm sitting down with Amelie Labbé and Craig Paton from SRP to talk structured products, options flows, delta, gamma, and the mechanical forces behind S&P 500 price action. Register below 👇

May 6 | 11am ET | Live Q&A: https://t.co/OraCemvrYw

[Zach Nelson @bearsdent]

@Mr_Derivatives Gamblers rotating from safe Semi play in NVDA to SNDK, INTC, MU, etc in hopes of obtaining a higher rate of return.

[Zach Nelson @bearsdent]

@Investingcom Moon

[Rand Paul @RandPaul]

The last time debt hit these levels, America had just helped win a World War. What's our excuse today? Runaway spending. Bloated budgets. A uniparty that refuses to say no.

I've said no. I'll keep saying no. But I need Americans to demand better from their representatives.

https://t.co/FJLyzr60Ea

[Hedgeye @Hedgeye]

🇺🇸 National debt now exceeds 100% of GDP

[Glenn Beck @glennbeck]

Allow me to translate socialist to English.

When Mamdani says, "NYC faces a budget crisis," he means, "we ran out of other people's money."

When he says, "we need new revenue," he means, "we're going to tax people more."

But wait, he already "taxed the rich" straight out of the city. So, who does that leave him to tax now?

The next richest class. Then the one below that. And the one below that. It happens the same way every time.

Isn't socialism neat?

[Spencer Pratt @spencerpratt]

They not like us

[Hedgeye @Hedgeye]

BREAKING: Half of planned US data center builds have been delayed or canceled

[First Lady Melania Trump @FLOTUS]

Kimmel’s hateful and violent rhetoric is intended to divide our country. His monologue about my family isn’t comedy- his words are corrosive and deepens the political sickness within America.

People like Kimmel shouldn’t have the opportunity to enter our homes each evening to spread hate.

A coward, Kimmel hides behind ABC because he knows the network will keep running cover to protect him.

Enough is enough.  It is time for ABC to take a stand.  How many times will ABC’s leadership enable Kimmel’s atrocious behavior at the expense of our community.

[Nick shirley @nickshirleyy]

🚨 Exposing California's corrupt "Stop Nick Shirley Act", instead of going after the fraudsters California is now going after the people exposing the fraud.

This bill AB 2624 will:
- Criminalize journalists with misdemeanors, $10,000 fines, imprisonment, and content takedown
- Let immigrant based NGOs' funding be confidential
- Take away freedom of the press from journalists
- Protect any "immigration support services" information from being public (healthcare, legal services, etc)

This bill was created by the Attorney General's WIFE Mia Bonta to stop fraud from being exposed. Please like and share this video everywhere! By trying to silence and intimidate journalists, they are trying to hide the truth from you. EXPOSE ALL THE FRAUD.