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#186 David Woo, Economist Who Nailed 2016 And 2020 Election Outcomes, Explains Why The Market Has The Trump Trades Wrong

The Julia La Roche Show

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The Impact of AI on Corporate Profit Margins

The increased investment in AI chips is not immediately reflected in company expenses due to accounting laws, leading to inflated reported profits. However, for most companies purchasing AI services, these expenses are immediately expensed, potentially resulting in negative profit margins. As a result, the current high profit margins driven by AI investments may not be sustainable, and a correction in the stock market could lead to a recession once the AI bubble bursts and corporate profit margins decline.

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