*we have more bad news: according to a global survey by Bain, cost savings from automation are broadly falling short of projections. Which means that those expecting big savings from their investments in artificial intelligence, which is most companies, will be disappointed. *
The missed targets “should be making executives uncomfortable,” since many of them are approving increased spending for artificial intelligence on the basis of expected savings, the consulting firm said in a report shared exclusively with Bloomberg News. The problem is there are little actual savings to speak of.
The survey, completed in April, was based on responses from executives at 951 companies with more than $100 million in revenue, across nine sectors: retail, technology, advanced manufacturing, healthcare, consumer products, energy, financial services, telecom/media/entertainment and insurance.
It found that among companies measuring their AI cost savings, the largest share (40%) realized reductions of 10% or less. Predictably, most had been expecting to see far more meaningful improvement, especially since they spent far more than that on the new technology.
My last three cars were Toyotas. They were fabulous, on average they lasted over a decade each. Is that a good reason not to buy a Tesla? Better ask AI!
GoogleAI:
Yes, your experience with Toyota is a highly logical reason to hesitate before buying a Tesla.
If your primary automotive priority is proven, decades-long predictability with minimal friction, moving from Toyota to Tesla introduces an entirely different ownership philosophy. [1]
Contrasting ownership philosophies
Predictable engineering vs. rapid innovation
Toyota achieves its decade-plus lifespan by being technologically conservative. They use heavily vetted, incremental mechanical improvements. Tesla operates more like a tech company, continuously rolling out over-the-air software changes and experimental features. While exciting, this means Tesla models have historically faced more unpredictable build quality issues and physical component wear over time. [1, 2, 3, 4, 5, 6]
Long-term financial predictability
A Toyota typically retains exceptional resale value because the global market trusts its simple, long-term repairability. Conversely, Tesla depreciation is steeper and more erratic. This is driven by aggressive corporate price cuts, rapid tech obsolescence, and the looming financial weight of out-of-warranty battery replacements. [1, 2, 3, 4, 5]
Mechanical wear vs. battery degradation
With a Toyota, a 12-year-old vehicle might need a new alternator or water pump—affordable fixes that keep it running. With a Tesla, the powertrain itself actually has fewer moving parts and requires less routine maintenance. However, as the vehicle approaches the 10-to-15-year mark, chemical battery degradation naturally reduces maximum driving range. If the battery pack eventually requires a full replacement, the cost can easily eclipse the remaining value of the aging vehicle. [1, 2, 3, 4, 5]
Where Tesla holds an advantage
If you are open to shifting your priorities away from pure longevity, Tesla excels in specific areas that a traditional Toyota cannot match: [1, 2]
Day-to-day maintenance: You completely eliminate oil changes, spark plugs, belts, and emissions tests.
Fuel convenience: If you can charge at home, you entirely bypass gas stations and start every morning with a full charge.
Driving technology: The immediate electric torque, over-the-air tech updates, and highway Autopilot functions provide a highly seamless, modern driving experience. [1, 2, 3, 4, 5]
If your primary goal is to buy a vehicle, maintain it minimally, and confidently drive it for the next 12 years without worrying about battery chemistry or software shifts, sticking with Toyota—or exploring their highly reliable hybrid and plug-in hybrid lineups—remains a deeply practical choice. [1, 2, 3]
The thing is, TSLA has been covering my expenses for quite some time…
But then, Tesla has discontinued the models S and X to make Optimus robots. Fremont will be the pilot plant and Texas will do the mass production. What to make of autonomous taxis and humanoid robots? Is Toyota going there?
Optimists say AI justifies the lofty valuations, but a key tool suggests otherwise
The overvaluation of US stocks has now surpassed the level that brought the stock market crashing down in 1929. At a rating more than double that of their British and European counterparts, and the highest since the peak of the dotcom bubble, US equities are in for a hairy decade.
This column has written extensively on how to find subtle indications that markets are becoming bubbly, the methods best deployed to try to sort out the wheat from the chaff when it comes to initial public offerings (IPOs) and the importance of valuation when it comes to long-term investment returns.
Profits are at an all time high. Analysts continue to upgrade forecasts.
but the bears have two counter-arguments that may suggest this is all just too good to be true.
First, the growth rates that analysts have forecast for the next two years are miles above the 20-year compound annual growth rate (Cagr) of 6.4pc.
Second, 10-year Cagr is forecast to be more than 10pc for three years in a row, based on 2026 and 2027 estimates. Even the cyclical peaks of 2000 and 2006, before the tech and mortgage bubbles collapsed, only topped out at 9.5pc and 8pc, respectively.
A draft report inside the Treasury Department is set to warn of the risks posed by the artificial intelligence market, likening key aspects of it to the dotcom bubble that upended the U.S. economy when it burst in the early 2000s.
Career Treasury analysts found that AI firms are more deeply entrenched in the U.S. economy than their dotcom predecessors and pose significant risk to the entire system if financial conditions change, productivity goals are missed or various choke points stymie growth.
A downturn in the AI market would send shockwaves throughout the entire economic ecosystem, the analysts wrote.
From Barrons
State-subsidized and dirt cheap: The Chinese AI threat to US model makers
This year is when artificial intelligence really began to be adopted by enterprises, and it came with sticker shock. Organizations are still trying to figure out how they can get the most bang for their buck, and they are eyeing Chinese models, which are very good while being much cheaper than the U.S. models that are driving up costs.
The AI trade assumes demand stays enormous and indifferent to cost, but Fortune 500 buyers are becoming more sensitive to price.
What if US corporation return to human workers or China AI?
Will US AI Companies resort to a price war? And does a price war mean for AI stocks?
Unfortunately, we have little choice in that matter. I don’t think there is a “S&P 500 -TSLA” fund that exists. If we invest in an employer-sponsored 401k and own equities, you will very likely own TSLA.
Hawkwin
Who will note that there IS a S&P500-Mag7 ETF: XMAG (up 13% YTD - better than the S&P500).
