Economic Perspective Warping Structure Framework
In the dynamic world of technology, the year 2023 saw a significant shift in the global tech market, particularly for Chinese companies like Huawei. Suspicions arose that these companies were impacted by US export controls, particularly in the area of advanced AI chips. The US issued a warning to global companies against using Huawei’s Ascend AI chips, citing export control violations, which led to significant market share losses for US chipmakers such as Nvidia in China.
This turbulence in the tech market is not unique. Governments, in a high-rate environment, continue to invest in AI and chips, defying pure financial logic. This pattern bears a resemblance to the dot-com bubble, but with a crucial difference: AI and chips are now national security assets.
The lesson for operators, investors, and policymakers is clear: tracking technology reality for long-term strategy is essential. However, it's also crucial to watch macroeconomic lenses for timing and capital allocation. The market doesn't price what AI is, but what AI looks like through the Fed's macro lens. Recognizing this helps leaders avoid misinterpreting valuation cycles as innovation cycles.
The technology keeps marching, but the lens distorts how we see it. Even during the dot-com bubble, the underlying technology (in this case, the internet infrastructure) continued to advance. The bubble was primarily due to Layer 3 valuation mania and low interest rates.
Two decades later, investments from the dot-com era underpinned trillion-dollar firms. The same technology and potential can result in completely different valuations. Geopolitics can override both technology reality and valuation cycles. This is where the Macroeconomic Lens Distortion Framework comes into play, explaining why tech investing feels schizophrenic.
For those interested in delving deeper into this topic, resources such as "The Mechanism of Macroeconomic Distortion In The Age of AI", "The New Macroeconomic Framework", "Is Google Lens The Most Popular AI-powered Visual...", "Reality Distortion Field", "Memory Distortion", "The Macroeconomic Environment in the AI Age", "The Hidden Macroeconomic Forces Behind AI", and "Macroeconomic Environment: Where Power Becomes Policy" provide valuable insights.
In conclusion, understanding the Macroeconomic Lens Distortion Framework is key to navigating the complex and ever-evolving tech landscape. By recognising the distortions in the market, we can make more informed decisions and strategies for the future.
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