AI scare trade claims more victims, commodities still strong

Hold IBM?

Ouch.

IBM appears to be the latest victim of the ‘AI scare trade.’

IBM wasn’t alone (DoorDash and American Express were hurt too):

Source: Bloomberg

The trigger?

An Anthropic research note talking about replacing clunky old IBM data systems that rely on its 1950’s era COBOL code. (Read it here)

A flow-on effect of that is many of the sticky customers that rely on IBM for its clunky but business critical infrastructure could be peeled off by quick and dirty AI made code.

Imagine being able to whip up your own meal-ordering app at home?

I bet it’s easier than you’d expect.

For me, these market jitters represent the first proper market advent of ‘vibe coding’ and agentic AI (which is starting to become more real by the day).

So I’m sure we’ll see more companies in the coming months face a reckoning with their business models.

Commodities getting stronger –
copper to retake ATHs?

Meanwhile, in commodities land, Glencore plc [LSE:GLEN] keeps pushing higher after its on-off merger with Rio Tinto [ASX:RIO].

Source: TradingView

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We know the reason for that merger, which lies at the heart of the commodities beast: copper.

This is the copper chart for reference:

Source: Trading Economics

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And it all boils down to this.

Those AI platforms, agentic, ‘vibe coding’ and all of it put together require hard assets.

The server racks, the cooling apparatuses, the wiring…

All of that needs rocks.

I expect two things to happen in the coming months:

• More AI scare trade falls in new industries
• More commodity companies to charge upwards

It’s almost as if things were designed this way…

Where the last two trades left in the building will be the US “Mag 7” (which are now issuing $100s of billions in corporate bonds) and the commodity plays which make the AI build out possible.

I know which side of the two trades I’d prefer to be on if I were an ASX investor.

The ASX is a unique place in this regard.

Click here to learn more about my Pax Silica thesis – where I detail how AI and commodities converge.