This week, we got another dose of the leaps that are imminent in AI but at the same time, the market signals are being lost.

Microsoft is cutting AI spending and that’s leading to a heavy selloff today in AI names with Nvidia down 6.3%. The driver of this is because AI is becoming cheaper and commoditized faster than anyone thought possible.

There is no moat and it will be hard for anyone to make money from AI.

The real story though will be people making money with AI. That’s where it hits the macro economy as jobs are replaced by AI and robotics.

In the last 24 hours alone:

• Google’s new Gemini 2.5 pro crushed prior benchmark highs
• DeepSeek V3 caught GPT 4o and is the best non-reasoning model
• DeepSeek is accelerating R2, which is based on this and should at least match the best reasoning models at a fraction of the price
• All this will be open source and very cheap from DeepSeek
• OpenAI released image generation integrated into 4o and it’s solved things like text and coherence (see above)

So while Trump is screwing around with tariffs for the next four years and trying to re-litigate the past 30 years of globalization, the world is going to be upended by technology. Whatever the macro impacts of tariffs are, they will be upended by the impacts of AI and robotics.

As Bill Gates said in February: Within 10 years, humans won’t be needed ‘for most things’.

That’s going to be the biggest shock to economies ever.

So while we are all drowning in tariff and political drama, I expect the real money in markets to be made in figuring out who is best using AI and who can exploit that.