The Bot Brief

"There is no force on earth more powerful than an idea whose time has come."       

- Victor Hugo

Bots in the News:

The Bot Index and the S & P 500, while having some wild swings during the week, produced virtually nothing for the entire week. It goes without saying that NVIDIA Corp. led the gainers within the Index with its 15.12% increase. Following the ‘breakout’ earnings and revenues, management threw in the announcement that the shares would be subject to a 10-1 stock split. Unfortunately, the strength of the chip maker was insufficient to overcome weakness in three of the Asian components of the index.

In a remarkable coincidence, two of the newest members of the Index were at opposite ends of the performance spectrum. Novanta Corp., who replaced Accuray Inc. earlier this month was the second leading gainer with its 8.18% climb. Conversely, the Japanese firm FUJI Corp., which was Cyberdyne’s replacement, was among the leading losers for the week. The stock fell 5.40%.

Other losing stocks included NIO Inc. (-8.52%), Hiwin Technologies (-5.66%) and iRobot who declined another 8.39%.

The stock with the worst weekly performance was Lincoln Electric who retreated 10.79%. Following a Simply Wall Street article entitled, “Investing in Lincoln Electric Holdings (NASDAQ: LECO) five years ago would have delivered you a 220% gain”, the stock cratered on significant volume. On Thursday, over one million shares traded hands as a major holder decided to take advantage of the excellent performance. Consequently, the stock fell from $227.12 on Thursday to $205.57 on record volume.

Predictions and Prognostications:

The famed economist Edward Yardini entered his projections that coupled AI with the potential market move for the remainder of the decade. Mr. Yardini cited the productivity impact of robotics and AI will boost corporate earnings of the S & P 500 by at least 8.8% per year during his concept of “The Roaring 20’s). Much like the Roaring 20’s of the prior century the current decade will be marked by rising productivity and corporate earnings. He noted that the 2% rate of productivity we have experienced since 1951 will be exceeded due to the imposition of AI and robotics. The impact which he suggests is that the Dow and the S & P 500 will each rise by 50% by 2030.

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Elon Musk also opined this week with a dramatic projection that the future holds the adoption of robotics will replace all human labor. In a remote appearance at last week’s Viva Technology conference, he made the prediction that, “there is an 80% chance that AI advances will result in such a situation where humans will not need a job and will have all they need.” He further opined that humans will benefit from the labor of robots and the universal income provided by governments will not be paltry, but significant. As we all know, however, in the field of economics it is easy to make a projection but not establish a reasonable time. Certainly, Mr. Musk is an expert at time frame evasiveness.

Pandora’s Box is now widely open as expressed by Tyler Cowen, Professor of Economics at George Mason University. His concern, and the title of a Financial Advisor Magazine article, is that “The AI Safety Movement is Dead”. He expressed concern that, since the AI safety movement peaked in March 2023, a number of competitive issues from govenments and companies have signaled the death of AI restrictions Just this week Senate Majority Leader Chuck Schumer and his working group on AI  issued a guidance document for federal policy. The plans involve a lot of federal support for research and development of AI and consistent recognition of the national security importance of the US maintaining its lead in AI internationally. Lawmakers seem to understand that they would rather face the risk of a US based AI systems than have to contend with Chinese developments without a US counterweight. Added to this is the rapid increase in spending by AI companies to modify AI platforms and increase capabilities and speed. All in all, some new worrisome for any restriction on the advance of Artificial Intelligence as it interfaces with mankind.

Member: American Economic Association, Society of Professional Journalists, United States Press Association. Institute of Chartered Financial Analysts, Robotic Industries Association (now A3 Automation), Member IEEE.

The Bot Brief is a weekly newsletter designed for economists, investment specialists, journalists, and academicians. It receives no remuneration from any companies that may from time to time be featured in the brief and its commentaries, analysis, opinions, and research represent the subjective view of Balcones Investment Research, LLC. Due to the complex and rapidly changing nature of the subject matter, the company makes no assurances as to the absolute accuracy of the material presented.