The AI practitioner that moved markets by a TRILLION dollars
Could it be that the AI assisted Financial Professional is already moving markets by $Trillions
“When will AI truly help professionals gain superhuman capabilities?”
Could it be that it is already happening?
We have always been fielding this question since I started working on Decisional. I now have a fresh example to offer of a sneak peak of the future.
The Short Case for NVIDIA Stock [1] , a 12,000 word blog post shared on an X with over half a million views ended up being the catalyst for more than a $1 Trillion in sell off in the market in late January.
What is interesting isn’t just the short case and subsequent impact it had on markets (a great read) but the story of the individual that came up with the post Jeffrey Emanuel.
Jeffrey Emanuel is a former hedge fund analyst with over a decade of experience at top long/short firms like Millennium and Balyasny, where he specialized in both longs and shorts. Around 2010, he began focusing on deep learning when it was still highly experimental (think Restricted Boltzmann Machines and MATLAB). He then switched gears to hands-on AI development and now maintains popular open-source projects, while being a power user of models like Claude (has over 6 accounts) and ChatGPT Pro ($200 Subscription), etc.
This unique blend of market experience and technical expertise informs his analysis of AI-related companies like Nvidia. He ended up published this essay serendipitously as an after thought and it may be a piece of content (unrelated to a crisis event) that has created the single largest swing in the history of markets.
Here is the timeline of events:
7AM PST Jan 25th- NVIDIA Price: $142 at close of market on Jan 24th
https://x.com/doodlestein/status/1883168862704947237
5:19 PM PST Jan 26th- VP of Dropbox shares this
https://x.com/morganb/status/1883686164336709661
Subsequently goes viral after being shared by Chamath, Naval, Jared and a number of folks
Monday Jan 27th- What happened next is an over $Trillion selloff over the weekend with NVIDIA losing $600 Billion the single largest drop in its history.
The Consensus View was missing something
All the reports from wall street were already out and NVIDIA is THE most covered stock in the world and yet, somewhere out there there was an AI practitioner out there in the world with something unique to say that led to a trillion dollar swing in the market. Each word in that blog post could be worth a cool $83 million.
The craziest thing is that Jeffrey didn’t even make a trade himself on this short and was using the post as a way to generate organic impressions for his blog!
“I never actually shorted Nvidia. I just put my analysis out there, and then the market reacted—but I didn’t take a position myself.
Jeffrey Emanuel on a the Delphi Podcast [2]
AI Application boom will grant superhuman abilities
In the post ChatGPT era there was an overhanging question, what are examples of AI applications that are actually making money besides the foundation model company. Or will there be other applications ? And will there be anything besides OpenAI and Github Copilot.
There were serious questions on how the revenue was going to be generated from the app layer.
There was not much to point to in 2022 and 2023. But now it is 2024 and AI apps are supercharging productivity across sectors giving birth to the single fastest growing SaaS app of all time.
Cursor - 100M ARR in 2 years
Bolt.New - 10M ARR in 2 months
Harvey - 10M ARR in 2023
Glean - 30M ARR
There is no other vertical where AI enhanced cognitive capabilities can have as huge impact like Financial Services.
“It’s Christmas every day for Application companies”
“I created my own silly website that turns Youtube videos into transcripts. When I first programmed this I was going to do it with GPT 4o calls. I was like as long as I can make a couple of bucks it is fine but then I realized I could use GPT 4o mini at almost no cost. I could have made the math work with GPT 4o but now it costs my less than a penny to process the document and now I have a 99% profit margin.”
Jeffrey Emanuel on a the Delphi Podcast [2]
It is also christmas day for the AI supercharged professionals of our age.
Every IQ point for cognitive work is worth $1500 on avg in the US and the models are getting smarter and smarter and we are not even talking about the speed of the same cognitive work getting reproduced faster through AI.
“I sat down Friday night, threw the whole 12,000-word analysis together in a few hours, and by Monday the market had already reacted.”
Although it isn’t mentioned it is super likely that AI tools were used in creating a post that moved the market by a trillion dollars. Write 12,000 words in a few hours is not small feat!
[1] Short case for NVIDIA Stock
[2] PODCAST - Jeffrey Emanuel: Viral Author of The Short Case for Nvidia Stock