Welcome to the Friday Bleeding Edge AMA.
For the benefit of newer readers, this is where, each week, I answer a selection of questions that Brownstone Research subscribers have been sending in.
We’ve got a great range of questions this week. From how Teslas navigate in low-visibility weather conditions to the reshoring of semiconductor manufacturing here in the States… and my thoughts on all the headlines screaming “crash: dead ahead.”
And, as a reminder, there’s still time for you to get all the details of my AI Retirement Playbook. I’ve used versions of this playbook for years. It’s a go-to strategy of mine when we’re seeing the kind of transformative technological shift we’re seeing with AI right now.
It’s easy to look at the rise of artificial intelligence over the past 20 months or so and think you’ve missed most of the runup, but that’s not the case. I believe that what we’ve seen in the stellar rise of AI stocks like Nvidia is only the first wave.
We’re on the cusp of a second wave of developments and investment in artificial intelligence. And if the history of previous technology booms is anything to go by, the larger gains are ahead of us…
Those who are prepared could be looking at the kind of wealth that could set them on the path to a very comfortable retirement.
You can go here to watch my video. I’ll share where we’re at in this AI boom, the next stage of AI we’re headed toward, and how to set yourself up to profit from the second wave.
A big thanks to all who have been writing us. My team and I love hearing from you. If you have your own questions or concerns, you can reach us right here.
I hope my U.S.-based subscribers enjoy the Labor Day weekend. It’s such a great time of the year.
Now, on to the AMA…
Jeff
Alphabet FSD approach (sensors) vs. Tesla approach (vision). I was hoping Jeff could elaborate on a potential drawback of Tesla’s vision-only approach to autonomous driving. I live in the mountains of Colorado where low clouds, snow, intense rain, fog, and other factors frequently create low visibility or would cover or “ice up” cameras. How will/does Tesla mitigate these negative weather factors?
– Andrew B.
Hi Andrew,
This question definitely comes up from time to time.
While Tesla has already proven that its Autopilot and full self-driving (FSD) technology is safer than human drivers, how does it perform in the kind of dangerous conditions that you mention above?
I have personally taken my Tesla out in snow, intense rain, and fog, and the performance of full self-driving was no different. It was very impressive. Despite the low visibility, the car had no problems navigating the roads.
The way I like to think about this question is – if we as humans can safely navigate the conditions, the Tesla will be able to do so as well. And if the conditions aren’t safe enough for humans (i.e. visibility is so bad that we can’t see more than a few feet ahead), the Tesla wouldn’t be able to do so either.
If visibility is insufficient for the safe operation of full self-driving, the FSD software will simply indicate that we need to take the wheel.
For example, this January I got caught in a whiteout snowstorm and could barely see past the hood of the car that I was driving. I clearly shouldn’t have been out on the roads. In a case like that, no self-driving vehicle should be attempting to navigate either.
Teslas – unlike any other vehicle aiming for autonomous driving capabilities – don’t rely on LiDAR or radar to sense obstacles or road conditions. It’s all cameras, all visual. Here’s what I wrote in last week’s Bleeding Edge – Tesla’s Biggest Competitor…
Tesla’s autonomous software is trained and operates on vision, just like a human brain. Each one of a Tesla’s eight cameras has a 250-meter field of vision. Everything these cameras “see” is fed into Tesla’s FSD neural network… which analyzes the data and “makes sense” of it, all in split seconds.
Because of Tesla’s unique approach to autonomy, Tesla EVs are capable of driving anywhere, there is no geofencing at all. Any Tesla with full self-driving is fully capable of navigating roads that have never been traveled by another Tesla.
That’s because Tesla’s FSD AI has learned how to drive based on billions of miles of real-world video enabling it to apply those learnings to any driving environment. This is very similar to how we learn and apply our own knowledge and experiences to new environments.
Due to Tesla’s approach to self-driving, a Tesla can manage difficult driving conditions like the ones I have tested my Tesla in… all thanks to the eight cameras around the vehicle.
There are three in the front of the car above the rearview mirror and two additional cameras on the left and right front bumpers. The Tesla has 360 degrees of vision around the car. Its range of view is greater than ours. If the Tesla can’t see the road, it’s a good sign that we shouldn’t be out on the road either.
Alphabet’s approach with Waymo, unlike Tesla’s, is not full self-driving capability. Waymo’s technology requires that every road/street within a geofenced area be driven and mapped with precision.
Its vehicles are not capable of driving outside of areas that haven’t been mapped yet. And in very adverse conditions, like the whiteout that I described before, it would have to disengage and hand controls back to a human driver (Note: Waymo vehicles have not yet operated in areas with snowfall).
Hi Jeff,
Great article on encryption and the coming quantum computer age. My question is how do I need to store my BTC and ETH to avoid any crook from accessing my crypto? I bought 2 BTC &. 69 ETH in Aug of 2016 and have held since. Is the only way to accomplish this to utilize cold storage? I am wondering if that would work.
– Mike C.
Hi Mike,
The safest way is by storing it on a hardware wallet like a Ledger or Trezor and keeping that wallet in a safe place offline (i.e. not connected to a computer).
The other option is to store your cryptocurrency in a cold wallet at an exchange. Two of the most reputable exchanges are Coinbase and Kraken. This is not as safe as a hardware wallet though, as we need to trust the exchange to be a custodian of our cryptocurrencies.
In your Bleeding Edge articles, you talk about one, 80 new manufacturing projects in 25 U.S. states, resulting in $450 billion in private-sector investments since the CHIPS Act was introduced in 2020 building… and two, the construction of AI data centers.
You have also talked about how it takes several years to bring these facilities online. Do you have any information about when the various facilities will come online? Or is that information not available? Thanks.
– Greg L.
Hi Greg,
Your question raises an important point. There is a significant lag time, measured in years, to achieving resiliency in supply chains. Building out an advanced semiconductor manufacturing plant is a complex task.
On average, it takes about two years from the start of construction to build out an advanced semiconductor fab.
TSMC’s first Arizona fab is scheduled to come online in 2025 with a 4-nanometer process – the same process used in mass production for advanced semiconductors today. And TSMC’s second Arizona fab will begin production in 2028 with a 2-nanometer process.
As a reminder, the “nanometer” is the distance between transistors on the semiconductors. This 2-nanometer process will be a significant enhancement of the existing process technology. These advanced fabs take time to build out… but they are well worth the wait.
For anyone interested, the Semiconductor Industry Association has been maintaining a list of all CHIPS Act grants which you can find here. Once construction has begun in these locations, we can assume that production will come online about two years later.
Hi Jeff, I’m just curious, people have been talking about how the market will crash badly. Do you think that the market will crash very soon? Thanks in advance. Regards,
– Teddy C.
Hi Teddy,
It’s an odd state of affairs right now. We have been experiencing a decent economy, but it has been plagued with inflation caused by poor economic and fiscal policy.
We have seen very little in the way of broad market health as a result. The majority of the gains on the NASDAQ and S&P 500 have been driven by a very small group of companies that have strong leverage to what’s happening in artificial intelligence.
There will be a 25–50 basis point reduction in interest rates at the September FOMC meeting. That will benefit the markets, especially smaller capitalization stocks. And I’m assuming that the interest rates will come down further in 2025, which again will be good for the economy.
At the same time, the U.S. government currently has a $1.6 trillion annual deficit, which will be increased to $2 trillion next fiscal year (which begins on October 1). The U.S. now adds $1 trillion to its national debt every 100 days. This is not sustainable. And this grossly irresponsible spending will come at the expense of both current and future generations.
Many projected that the collapse of the yen carry trade was the beginning of a major crash. I wrote otherwise. It wasn’t. And it isn’t. There eventually will be some kind of credit event that will be painful, but we’re unlikely to see it over the next few months.
So much rides on this upcoming election as the economic/fiscal policies are so starkly different. My team and I will adjust our investment strategies to adapt to whatever environment we face. While we’d prefer to have a strong economic policy, low inflation, and responsible fiscal policy which results in healthier market conditions for our subscribers, we’ll adapt to whatever conditions we’re faced with.
Regardless of what happens, certain sectors in high tech and biotech are going to thrive no matter what. It can be hard to balance the idea that we can have inflation and unhealthy market conditions, and at the same time have incredible investment opportunities due to rapid technological advancements. But that’s exactly what’s happening right now.
My even bigger concern however is a black swan event, or a “wild card” which I wrote about on January 3 in Outer Limits – 2024 Will Be Chaos – Here’s How We’ll Come Out Ahead. I’m happy to say that my research has aged particularly well since I wrote it.
As for the wild cards or black swans that I highlighted in that issue, I wrote:
Several of these items have happened, and we still have four months to go before the end of the year. Given what is currently transpiring, we need to keep a close watch and expect volatility.
My team and I spend very long days at times like these monitoring events and looking for catalysts that might cause a major market pullback. When we find one, our subscribers will be the first to know.
Hi Jeff. How do you see the solution to the U.S. coming up with the needed & trained technical staff for all the reshoring fabs in the U.S.? Thanks.
– George K.
Hi George,
This is an excellent point that you bring up. We’ve seen more than 50 years of moving manufacturing overseas, and suddenly there has been a flip in that trend since 2017 to bring advanced manufacturing back onshore.
Naturally, there are going to be some expected job shortages in the U.S. in the semiconductor industry as a result. The Semiconductor Industry Association (SIA) quantified that gap in the semiconductor industry considering all the announced investments and new fabrication plants.
The SIA estimates that there will be as many as 67,000 unfilled jobs in the industry with all these new fabs coming online. This is a major gap, and it’s also a fantastic opportunity.
One of the key conditions of receiving a grant from the CHIPS Act is that the plants stay open, continue production, and provide high-paying jobs for many years to follow. These are desirable high-value jobs with strong economic benefits.
One example of how labor shortages are dealt with is through investing in technical programs in the areas where fabs are constructed. Intel has done this in Arizona, Oregon, and New Mexico, and even Israel and Ireland overseas.
Intel helped create and support both one- and two-year semiconductor technician certificates at various community colleges to help develop the workforce to meet entry-level positions. And then those skilled workers have a career path as they develop new skills on the job and pursue additional education while they are working.
Many companies will take this approach to filling those jobs. And these programs can be put in place now so that skilled technicians are ready to begin work when the semiconductor fabs come online. As I mentioned earlier, it takes about two years to build a fab.
There will also be a need to bring in skilled workers on H1-B visas to help out as well.
But this problem isn’t just a semiconductor industry problem, the number of unfilled jobs through 2030 is much greater when we consider engineering and computer science.
A labor shortage like this creates an opportunity for more than 1 million high-quality jobs. Very similar approaches are taken with regard to computer science. There are technical certifications and intense computer science boot camps for those who are willing to work hard and improve their skills quickly.
And fundamentally, the education system needs to improve its focus on science, engineering, and math, rather than focus on things like “social-emotional learning” if we want to have a vibrant economy and high-paying, quality jobs for our children and grandchildren.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
