Wall Street Questions AI Spending As Concentration Risk Masks True Demand

There are many things about AI that are starting to spook serious investors, including the increasingly dubious growth projections based on fantastical assumptions. 

But one of the most ominous risks is the growing tide of overlapping investments by allied enterprises, which analysts fear is creating a concentration of wealth reminiscent of 2008, in which circular 'you scratch my back, I'll scratch yours' investments are masking actual demand for AI services. If this is true and the economy is too dependent on AI-related data center and other AI build-outs, the risk of collapse is magnified. JL

Karen Weise reports in the New York Times:

Alarms are rising as Wall Street and others question whether AI spending can be justified. Meta’s stock sank more than 7 % on Thursday after it revealed its A.I. outlays and that costs were growing faster than its revenue. And last week, for the first time since going public in 2004, Google said it had “negative free cash flow" - spending more on day-to-day operations and new infrastructure than it was taking in from its businesses. Amazon’s free cash flow has plunged to negative $7.6 billion. Much of the growing compute backlog comes from partnerships with OpenAI and Anthropic. That means the fate of the giants rests in large part on the start-ups’ needing all that computing power, and their ability to pay for it. That poses a concentration risk, creating “a more circular system that could mask true demand.” 

To Improve Results, Kyiv's Military Ceding Control of Resources, Decision-Making

Recent headlines reveal that some Ukrainian brigades are losing the ability to recruit new soldiers and attract more advanced weaponry while others are gaining. This is not random.

Analyses by Ukraine's previous Defense Minister discovered that some politically favored units were getting excess recruits and new weaponry despite high casualties and underperformance in achieving goals, while others, which exceeded expectations, were being starved for resources. That is now changing under the new Commander in Chief, as the need for more effective performance is taking precedence over connections. Many in Ukraine's traditional hierarchy are unhappy about losing control of budgets and power, but to continue to modernize its armed forces and keep morale high, these changes are essential - as they are in so many global organizations. JL

William Dixon and Maksym Beznosiuk report in the Center For European Policy Analysis:

Armed forces do not resist new technology; they resist losing control over how resources are allocated and who decides. Personalities matter, but the confrontation is institutional. Fedorov’s procurement reforms did not just seek to modernize Ukrainian defense spending: they challenged the General Staff’s control over how personnel, equipment, and resources were allocated. After conducting a performance audit of Ukraine’s 120 brigades, Fedorov’s team discovered nearly 15% suffered disproportionately from poor leadership and high casualty rates. His solution: consolidate underperforming brigades and reallocate their personnel to competent and more effective units chronically short of manpower.  The General Staff resisted. The breaking point occurred when the civilians tried to reassign technology-led units, only to find the military hierarchy prioritizing legacy formations, such as the 425th and 225thAssault Regiments, which persisted in high-casualty attacks.

Ukraine's Drones Flown From 100s Miles Away, But Launch Still Physical Risk

Thanks to new technology, Ukraine's drones can increasingly piloted by operators in hidden underground bunkers hundreds of miles away from the front.

But to launch the drones still requires physical risk to drone teams that have to transport them to the front, put them together and launch them. Ukraine is trying to correct that imbalance - as the drone pilots are elite, as well as valued Russian targets - but the launch process remains dangerous. JL

Sinead Baker reports in Business Insider:

New technologies are allowing Ukrainian drone operators — who are high-priority targets — to control drones from relatively safer locations hundreds or even thousands of miles away. But human soldiers often still have to go to risky locations to transport, prepare, and launch these aircraft The aircraft need to be brought to a launch site and prepared, meaning soldiers are still needed closer to the danger, at least for now. Ukrainian interceptor drone and other uncrewed aerial system operators are increasingly using satellite connections that allow them to operate far from the launch site — potentially even from another country. Keeping drone operators safe is critical for Ukraine because Russia treats them as top targets.

'Russian Armor Burning In Sunflower Fields Strewn With Corpses:' Kremlin Fails Grow

This summer, in Dobropillia, Lyman, Kostiantynivka, Kupiansk and other Ukrainian battlefields, an offensive trend has become a dirge, as the Kremlin's return to large mechanized attacks which sacrifice armor for the ability to infiltrate troops further into the frontline kill zone have proliferated at massive cost of life. 

While it remains premature to write off anything - such as tanks - the way they are being used has to change. Armored attacks versus drones is a literal dead end, but so is the potential for inserting a few or few dozen troops at the cost of armored destruction. The reality is that Russia has not found the answer to Ukraine's initial defense, followed by its quick counterattacks, which have gained more ground faster than the Russians have been able to do. There may or may not be some new antidote some day, but it is not apparent this summer in Ukraine and not likely to appear this fall or winter, either. JL

Giorgia Provinciali reports in Medium:

One of the largest armored breakthrough attempts in months ended with the wreckage of Russian armor burning among sunflower fields strewn with corpses. Even Russia's new anti-drone active protection system, which was supposed to intercept incoming threats: proved useless against Ukrainian FPV drones that locked onto them one by one, striking their known weak points. To infiltrate a few dozen soldiers beyond Ukrainian positions, Moscow is willing to lose fourteen mechanized vehicles - nine of them tanks - and more soldiers on top of that. It is a doctrine of expendability taken to extreme consequences. In a drone-dominated kill zone, everyone advances by infiltration - but while the Ukrainians do it by first putting out the enemy’s eyes and sparing their own men, Russia no longer has the capacity to conduct such operations, and it compensates with the only resource its doctrine considers unlimited: flesh. The mechanized assault at Dobropillia is not a return to maneuver warfare: it is its funeral

OpenAI Slashes Prices On 2 AI Models As Businesses Fight High Costs

Message received. OpenAI's announcement of dramatic price cuts for some of its AI models suggests that business resistance to AI pricing now threatens its growth so severely that OpenAI recognizes it has to take drastic measures. 

This is one of a number of signals that Silicon Valley, in its haste, greed and over-hyping has wounded, if not yet killed, the AI golden goose. From widespread public rejection of data centers (support for the centers has now become a serious political liability) to investors' skepticism about tech financial projections to corporate refusal to pay unsupportable prices, the AI FOMO has largely evaporated. The larger questions are what this means for its future growth trajectory, ability to provide returns to investors and its impact on the broader economy. JL

Cris Tolomia reports in Quartz:

OpenAI announced it is reducing the price of two models in its GPT-5.6 family - cutting the cost of GPT-5.6 Luna by 80% and GPT-5.6 Terra by 20% - three weeks after the models launched. The cuts arrive as enterprise customers have grown reluctant to authorize large AI expenditures without a clear picture of returns. Cheaper Chinese open-source models have sharpened the competitive environment, pushing OpenAI and Anthropic to make the case that their products are worth the premium. The broader backdrop has been building for some time. Enterprise customers have been cutting AI spending and demanding clearer returns on investment. OpenAI attributed the reductions to efficiency gains made during internal development of GPT-5.6.

Russians Try Armored Assaults Again - And Reap Same Failure

If repeating the same failed action and expecting a different outcome is the definition of insanity, the Russian military needs to be committed. 

Under constant pressure from the Kremlin to continue offensive operations, Russian commanders find themselves recycling old tactics in place of new tactics in hopes that something might eventually work. At Dobropillia, the Russians launched an armored assault on Ukrainian positions, evidently in hopes that the Ukrainians would be expecting another infiltration attempt by small numbers of Russian infantry (which was the tactic that replace armored assaults...) and so would miss the approach of several dozen tanks, infantry fighting vehicles and other weaponry. As anyone rational can imagine, the Ukrainians did not miss the incoming armor. The attack was annihilated. JL

Vikran Mittal reports in Forbes:

Russian forces launched their largest mechanized assault in many months against Ukrainian positions in the Donetsk Oblast. The attack was part of a larger, multi-axis offensive around Shakhove. The attack failed. Ukraine employed FPV drones, heavy bomber drones, and artillery. The Ukrainians had laid minefields along the likely avenues of approach and damaged bridges leading toward their positions. Russian attempts to use pontoon bridges, were destroyed by Ukrainian aviation. Russian anti-drone armor was largely absent. In addition to reducing speed and maneuverability, Russian crews have reported transmission failures with the added weight. Under pressure to continue fruitless offensive attempts, the assault suggests Russia's difficult in search of a more effective approach. (But) it is unclear whether adaptations will be sufficient to break through Ukraine's constantly evolving drone-centered defenses.

How Ukraine's Air Assault Troops Annihilated Russia's Tank Attack on Kramatorsk

The Russian command spent months planning an offensive to take Kramatorsk in Ukraine's Fortress Belt, only to have the assault annihilated by an even better planned Ukrainian counteroffensive which disrupted the Kremlin strategy with heavy losses. 

What continues to be evident in Russian initiatives is a lack of recognition that the Ukrainians are looking at the battlefield options the Russians have and then designing tactics for thwarting them with as much damage and as many casualties as possible. Why, after almost five years, the Kremlin refuses to recognize this, will be the stuff of great history some day. At present, it is the stuff of great Ukrainian intelligence, planning and performance. JL

David Axe reports in Trench Art and Clement Molin reports in X:

Two Russian combined arms armies spent months planning a powerful mechanized assault toward Kramatorsk. The attack failed on July 22nd. Ukrainian air assault brigade spoiled the attack in a complex operation beginning in April. Despite having been in the area for eight months, Russian forces had been unable to consolidate their positions; rivers complicated logistics, and it was impossible to concentrate large numbers of troops. The Ukrainians were able to advance stealthily behind enemy lines, reaching the Mokri Yali River. Counterattacking through gaps in Russian defenses 60 miles southwest of Kramatorsk, the paratroopers pinned down half of the 90th Division’s forces. So when the division attack in July, it attacked weakly. Ukrainian drones made quick work of the advancing T-72B3A tanks and other vehicles. This operation is taking place because the Russian army is unable to bring reinforcements to the front as anti-tank ditches prevent any Russian mechanized attempt at relief.