My Investing Muse (04May2026)
Layoffs, closures and Delinquencies
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Germany is rapidly heading towards a severe economic crisis. Germany's unemployment rate reached 6.4%, the highest since the Covid-19 peak, which also was at 6.4%. - X user Megatron
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Cognizant to cut 4,000 jobs as consulting industry continues to see mass job shedding - MacroEdge
UK business closures average 71,000 every quarter
Chegg is now down 99% from its peak because AI has killed its business entirely. Chegg was a $14.7 billion edtech company that charged students $20 a month for homework answers from a database of 79 million solutions built over a decade. Then ChatGPT launched in November 2022. Five months later Chegg’s CEO admitted it was destroying their business. The stock dropped 48% in a single day. Revenue dropped 49% by Q4 2025. Subscribers collapsed from 5 million to under 3 million. The company fired 67% of its staff in two rounds last year and shut down all US and Canada offices. AI does the same thing instantly for free and explains the concept behind it. It went From $14.7 billion marketcap to $114 million in 39 months. The first company to be officially killed by AI. - X user Bull Theory
This is the first notable casualty from the AI era. Will there be more to come?
My thoughts
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The chart from Crescat shows analyst estimates for next-4Q rolling FCF of AI hyperscalers (MSFT, AMZN, GOOGL, META, ORCL) rising for years but now plunging sharply into 2026—with Oracle flipping negative and combined FCF collapsing. Implication: Massive AI capex is projected to outrun revenue growth, squeezing cash flows hard. This divergence from the rising S&P 500 flags valuation risk and potential margin pressure in big tech despite the hype. Estimates can shift, but it’s a clear “race to the bottom” warning on profitability. - by Grok
Should AI CapEx continue to outrun revenue growth, the expectations on AI ROI should compound. Recently, we noticed an increase in subscription fees for some of the LLMs. Personally, I have started using other open-sourced, affordable models like Kimi. I plan to evaluate the performance after some time, and the experience has been decent thus far.
Middle East Conflict and U.S. Strategy
The recent declaration of the end of war in the Middle East offers the United States a potential opportunity to disengage from the ongoing military conflict in the region. However, there remains a sense of unfinished business, as several objectives—including regime change in Iran, the dismantling of Iran’s nuclear program, and the lifting of the blockade at the Strait of Hormuz—have not been accomplished. From Iran’s perspective, the cessation of military operations in other regions such as Lebanon, Gaza, and the West Bank is also a critical demand.
Ceasefire and Ongoing Risks
Despite the ceasefire, the continued presence and movement of military forces and equipment in the region mean that the potential for renewed conflict remains. The ceasefire period may simply serve as a temporary pause, allowing the involved parties to regroup. The American blockade continues to pose a significant threat, as regular maritime traffic has not yet resumed. With rising inflation and oil prices reaching new highs, economic impacts are expected to persist in the coming weeks. It will take time for production and supply chains to normalise. Meanwhile, the American stock market has recently hit record highs. Retail investors remain active, and it is important to monitor the movement of funds, including those managed by institutional investors.
U.S. Economic Conditions and Labour Market
Despite a lower GDP outlook of 2.0% and increasing reports of layoffs, the U.S. has recently achieved one of the lowest jobless claims on record. This apparent contradiction can be explained by the specific definitions and methodologies used in data collection for labour market statistics.
Corporate Earnings Updates
Earnings Summary provided by Tiger Capital Research
Major technology companies such as Microsoft and Apple have announced their earnings in the past week, with results leading to mixed reactions in the stock market. It remains to be seen if more positive developments will emerge in the near future.
Financial Strategy and Outlook
Let us spend within our means, invest only what we can afford to lose, and avoid leverage. Let us review our current holdings and divest from businesses losing their competitive advantages. Additionally, I will consider adding both hedging strategies and defensive positions to our portfolio to mitigate risk.
As we move forward, it is crucial to conduct thorough due diligence before assuming any new responsibilities.
Wishing everyone a successful week ahead.
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