AI has injected much-needed excitement for the bored macro community, lacking new economic or geopolitical themes in recent months. Analysts, caught in the default mode of seeking answers in historical patterns, often overlook the importance of understanding the technology itself.

Optimists' favorite is the now-viral schematic chart on the investment cycle. The axis-less, proof-less chart plots a rising sinusoidal curve to illustrate the unprecedented nature of the upcoming wave. A quick glance at the headlines is enough to understand the view of the growing majority, including this writer. The chart itself is so beautiful and powerful that one is compelled to think it must be true!

Pessimists table the peak-to-trough falls of Nasdaq and a select number of stocks during the TMT crash. The bubble believers seldom compare the preceding rise, which allows them not to predict where the peak could be and assures them to be right from some peak(s) somewhen.

These history watchers have little time to dwell on the significance of the technology and potential follow-on innovation, product, and productivity cycles that could be sparked in a host of sectors. The long-term implications and rapid pace of change associated with these advancements, if realized - and therein lies the risks, will truly set this theme apart. Positively, the theme is developing in the era of big corporates exercising pricing power, with an unprecedented focus on the bottom line.

At the very least, AI introduces a fresh and positive theme amid an otherwise gloomy economic landscape. Nevertheless, we must acknowledge its potential to become the most significant negative theme within the political and geopolitical realms. The stresses and strains of its gargantuan waves should force macro watchers, too, to focus on details of what is rather than past patterns.