By Alex Brummer,Editor
Copyright dailymail
The enormous multi-billion financial bets being taken on artificial intelligence (AI) roll in.
Latest to emerge is BlackRock’s mooted takeover of Macquarie-owned Aligned Data Centres in a deal valued at $40billion (£30billion).
Aside from the high price, investors in funds managed by BlackRock have reason to be fearful of the vampire-kangaroo Macquarie which has a history of selling duff utilities such as Thames Water.
The deal comes hard on the heels of the Saudi Arabian Public Investment Fund’s $55billion (£41billion) takeover of listed gaming trailblazer Electronic Arts and the outsized $100billion (£74billion) injection of capital by Microsoft into OpenAI.
Private equity (PE) is splashing the cash even though it is desperate to dispose of past, stuck projects.
The biggest PE players pass them on to secondary funds in a weird, fresh kind of alchemy. The lengthening list of deals, out of sight of public markets, should be a sell signal. Serious voices are becoming ever more concerned about bubble prices, especially for anything laying claim to being an AI champion.
This has all the look of the period leading up to 2000 when all that was required was for firms to add ‘.com’ to their operations for valuations to soar. The question for stock market investors and those indirectly putting money into private equity through pension funds is whether this is the end of a cycle of dangerous speculation. Authoritative voices are starting to fear a crash. The timing and trigger is unknown. Or as the International Monetary Fund says ‘uncertainty about uncertainty’.
Economist Austan Goolsbee, president of the Chicago Federal Reserve is fearful of AI over-exuberance. Writing in the FT, Ian Harnett, chief investment strategist at Absolute Strategy Research, warns the AI bubble is nearing its endgame. He argues that the hyper-scalers of tech are a portent of the bust to come. It is impossible to disagree. Equities continue their dazzling progress. The US government has shut down because of a debt row. Here, Chancellor Rachel Reeves finds herself trapped in a deficit and debt vice by the Office for Budget Responsibility. It will end in tears.
Money talks. Ireland has been at the vanguard of criticism of Israel’s war on Hamas and was among the first Western democracies to bat for Palestinian statehood. In support of the policy, it has been seeking to impose sweeping economic sanctions on Israel.
Even before the shockwaves from the Manchester synagogue killings, Dublin was showing signs of a retreat. Some 11 per cent of Ireland’s workforce is employed by US firms, including Silicon Valley heavyweights.
An estimated one-third of the tax take comes from US corporations. Business groups fear that penalising Israel settlements could imperil new investment in Ireland and lead to an exit of tech giants which have affiliated themselves to Donald Trump.
A retreat from an aggressive anti-Israel stance may prove realpolitik.
As beer dispenser of choice and hero to working people and younger imbibers, Wetherspoons chief Tim Martin faces extraordinary obstacles to keeping prices low. The latest burden, on top of soaring energy costs, is the ‘extended producers responsibility’, a green packaging levy hitting hospitality and food hard. Add to that the stealth levy for new nuclear.
Profits down the hatch!