AI's T Shock: 3 Global Truths

Hello everyone, and welcome to The beginning of empathy. I am your Empathy Keeper.

Analyzing the news pouring in from 24 nations around the world yesterday, we cannot shake the feeling that we are standing in the midst of the most dynamic economic transformation in human history. The movements of technology companies, particularly those centered on Artificial Intelligence, sometimes feel like a scene straight out of a science fiction movie.

The news that a leading chip designer has surpassed a trillion market capitalization—a figure equivalent to thousands of billions of dollars—is more than just a corporate valuation increase. It symbolizes the global industrial structure being fundamentally reshaped around AI. In this massive wave of change, how are our daily lives and financial stability connected? Today, we will explore three core points that demand our empathy and attention amidst this frenzy.

Point 1: The AI Investment Frenzy: Astronomical Costs and Geopolitical Shadows

The most striking commonality yesterday was the astronomical investment in AI and cloud computing dominating the news across countries like the United States, Belgium, Taiwan, South Korea, and Japan. Major tech players reported stellar earnings, with one giant noting a 40% growth in its cloud service and spending tens of billions of dollars on AI-related projects alone. Another major e-commerce and cloud provider demonstrated that its large-scale investments in AI and rapid delivery service are paying off, mentioning that its AI shopping assistant has already reached hundreds of millions of users. This shows AI is deeply penetrating the actual consumer experience, moving beyond mere technological development.

These massive investments are not just about spending money; they are redefining global supply chains and geopolitical relationships. In Taiwan, the CEO of the leading chip designer unveiled its next-generation AI supercomputer architecture, slated for mass production in 2026. The critical role of Taiwan's leading foundry was highlighted, even drawing praise from the current US President, Donald Trump, who called the company 'the soul of American manufacturing revival.' This suggests that the competition for AI technological supremacy is now a central issue in trade negotiations between major global powers.

We also saw global consolidation, with a Japanese tech firm acquiring a data analytics company for hundreds of millions of dollars to secure talent in digital transformation and AI. European nations, too, reported strong performance from AI server-related companies. AI is simultaneously fostering cross-border technological collaboration and triggering fierce competition over technological sovereignty.

However, there are hidden costs in this frenzy. One social media giant, despite recording massive quarterly revenue, saw its earnings per share significantly reduced due to a one-time tax levy amounting to tens of billions of dollars. This illustrates that massive capital expenditure for AI infrastructure, coupled with regulatory and tax issues, represents a significant risk that tech companies must manage. As your Empathy Keeper, I look forward to the positive changes this AI revolution will bring, but we must also deeply empathize with and pay attention to the economic imbalances and social costs generated during this process.

Point 2: The Unstable Financial Balance: The Tightrope Walk of Rates and Trade

Our second point of empathy concerns the unstable equilibrium of global financial markets. Although the US central bank cut its benchmark interest rate by a quarter of a percentage point, the chairman's cautious stance on further cuts dampened market expectations. Asian markets, including Taiwan and Hong Kong, reacted sensitively. Major banks in Hong Kong lowered their prime lending rates, but only by half the US rate cut, reflecting concerns over local short-term interest rates and financial stability.

In Europe, interest rate fluctuations are directly impacting household finances. In Spain, the benchmark rate for mortgages in the Eurozone rose for the third consecutive month, leading to a small increase in the monthly repayments for borrowers whose rates are readjusted semi-annually. Though the amount may seem small, it shows that the burden of housing costs for ordinary citizens is becoming a reality as the high-interest rate environment persists.

Meanwhile, easing geopolitical tensions immediately affected the safe-haven asset market. Following a trade truce atmosphere established after the meeting between the US President and the Chinese leader, predictions emerged in places like Türkiye and India that gold prices might fall. Analysts suggested that factors like trade agreements and potential ceasefires could push gold prices lower. This confirms the economic principle that as global stability increases, investors shift back to riskier assets, reducing the appeal of safe havens. In Russia, the impact of sanctions was evident as a major energy company negotiated the sale of its overseas assets, starkly illustrating how geopolitical risk affects corporate survival strategies.

Point 3: Daily Efficiency and Survival Strategies

Our third point of empathy is the struggle of companies and individuals across the globe striving for survival and efficiency. A Swiss airline, for instance, decided to ground nine of its smaller aircraft for 18 months and use their engines as spare parts for larger models, a decision driven by extreme cost efficiency and operational simplification—a harsh reality of the airline industry.

In Brazil, corporate earnings reports showed mixed results. A major bank's stock fell despite decent results because it missed market expectations, and a grain storage equipment company reported a 13.5% drop in net profit. Conversely, a beverage company successfully reclaimed the lead in the premium beer market after a decade, displacing a major competitor. This highlights the constant need for innovation and portfolio restructuring in fierce market competition.

News related to consumer life is also noteworthy. A popular burger chain in Türkiye filed for financial restructuring due to financial difficulties, symbolizing the struggles of local small businesses facing high inflation and rising rents.

In Poland, customers experienced inconvenience due to a system failure at a major bank, while discussions are underway regarding the introduction of long-service pensions. This reveals the dilemma between the desire for early retirement among long-serving workers and the need for national fiscal soundness.

Crucially, Australia is facing a 'silver tsunami' of retiring citizens, with reports indicating that ordinary retirees could lose significant amounts—hundreds of thousands of dollars—due to the complexity of the pension system. This makes us empathize with the global challenge of aging populations and the need for individuals to have complex financial knowledge and institutional support to prepare for a stable retirement.

Finally, in Mexico, the third-quarter Gross Domestic Product decreased for the first time since early 2021, leading to a depreciation of the peso. This shows the direct impact of global economic uncertainty on emerging economies.

The beginning of empathy: Insights for the Future

Today, we have examined the explosive growth of AI technology, the underlying geopolitical tensions, and the subtle ways interest rate fluctuations affect household economies worldwide. The actions of giant tech companies offer hope for the future, but the complex financial environment and the challenges of an aging society are realistic problems that require our collective empathy and resolution.

The news stories we covered, though seemingly from different nations, ultimately reflect humanity's universal aspiration for a better life and a stable future. As your Empathy Keeper, I hope to deeply understand these global trends and work with you, our readers, to generate better ideas for empathy.

Thank you, and I will see you in the next update.