*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).
On December 18, 2024 TSLA closed at $440. Since then covered calls produced 27.69% return or a CAGR of 17%. As Liberace would have said, “I cried all the way to the bank.” The only way a stock can generate such high option returns is investor interest gambling to get cheaper shares.
Lifetime TSLA avg. CARG 45.3%! Not a smooth ride because it reflects Tesla’s business strategy. At this time Tesla is exiting the luxury car market shifting to Semis and RoboTaxis in the car business and developing brand new markets for humanoid robots.
What a brilliant strategy, develop AI to drive cars and use the same technology and infrastructure to drive humanoid robots. Every TSLA price drop is a buying opportunity that Musk haters miss. Have a good look at the chart, Tesla is close to the next breakout powered by the EV Semis, RoboTaxis, and Optimus robots backed by income for many other Tesla products like storage, VPPs, etc.
I already posted a number of threads about my Covered Call system but you were not paying attention. I developed software to find the best calls to sell…
I only find out what I’m going to trade in under 24 hours of making the trade. The more interesting question is which stocks to trade. The Covered Call Selector is designed to not just to find the best call in a single option chain but across multiple option chains. For that I had to invent a new metric, $$$Day.
Tesla’s option chain has over 3000 entries and one can’t handle that efficiently without the help of software.
It was a long development cycle that started with a simple spreadsheet. When it got too complex and error prone for spreadsheet I added the selectors to my Portfolio app
What’s already abundantly clear but verboten to say as it would pop the bubble of AI valuations and triumphalism is that AI is unaffordable once the direct and indirect subsidies are withdrawn.Nothing that cosumes this much electricity and requires such an immense scale of costly processing and memory capacity can be low-cost, never mind free.
The major AI platforms and vendors are subsidizing corporate and individual users in the hopes that they can acheive AI sector dominance --and the pricing power that comes with it–via the network effect, the dominance generated by having the majority of users bound by habit or dependence to your platform or tools.
Pitched battle for business users comes as AI companies seek lasting streams of revenue.
Hans Ibarra, a founder building an AI-voice startup, has found himself on the receiving end of a big opportunity: Top artificial-intelligence companies such as OpenAI, Anthropic and others desperate to win his business are ramping up discounts.
Across Silicon Valley, startup founders like Ibarra are enjoying a wave of computing credits and fielding competing offers from AI-model makers racing to land new enterprise customers. Cursor, the AI-coding company bought by Elon Musk’s SpaceX, offered a 75% discount through July 5.
“If I’m choosing between a really cheap Chinese model that I actually have to pay for, and a very expensive Anthropic model that I don’t have to pay for, I’m going to pick the Anthropic model,” Acker said. “I’m always going to pick the one for which I have free credits.”*
Further up thread I posted links that indicated that human workers were cheaper than AI. And Ford found out human workers were needed as AI couldn’t do the required work.
return to first link: There are many other hidden subsidies within the AI machinery.There are corporate tax write-off subsidies, energy subsidies, tax credit subsidies for building data centers, and so on. If these were stripped out, what would the real unsubsidized costs of AI be? No one knows, but they would be higher than what’s presented as the cost now.
How many current users of AI are willing to pay the full unsubsidized costs for their use of AI?We can safely say far fewer than are using the tools for “free” due to subsidies both direct and indirect.
Perhaps the AI bubble will make the dot.com bubble look just like a blip.
My subscription level at Anthropic got Fable 5 until today, but it was down much of the time. So this was extended till this coming Sunday. Life is magic sometimes. I just put a huge question set before Claude for the video game debugging. Fable 5 kicked in because of the scope of the problem. With much simpler brush strokes, the entire problem got dissected. The solution is here for tomorrow morning. I am just signing off for the day.
But in my experience, even an “old”, “staid” stock is producing similar gains. So far, the only stock that I’ve been experimenting with by selling covered calls [nearly] every month is Disney. And it is also producing good results (28.64% yield from calls+divs, 38.55% IRR including ALL cash flows from inception of buying the stock, via a put option).
Over the last few months I’ve expanded the experiment to include a few other stocks, but those don’t have a year plus track record yet.
But it’s important to note that I am still not convinced that covered calls can be a long-term strategy for gains (income). There has to be some “catch”, some market event that makes it all not work suddenly. That’s because the market generally (NEVER) doesn’t provide free money (free via forms of arbitrage, or free via anything else) to anyone for very long. That’s why this is still an experiment for me and only comprises a tiny percentage of my assets (I think still under 3% for now).
The only way a stock can generate such high option returns is investor interest gambling to get cheaper shares.
