The Aussie Byte

AI chatbots are now providing financial advice that's as good as or better than human advisers, and they're free. This development is an earthquake for the financial advisory industry, which has seen its lucrative paydays stripped away by online trading and indexing. Big banks and independent money managers have pivoted to dispensing advice to collect fees, but AI chatbots are now coming for that too. The bots know more and are less burdened by conflicts and biases. This shift is a significant threat to the financial advisory industry's business model.

The Australian government, led by Prime Minister Anthony Albanese and Industry Minister Tim Ayres, is in high-stakes negotiations with the Trump administration to secure access for Australia's critical infrastructure to top-tier AI models, such as Anthropic's Fable and Mythos, which have been restricted due to safety fears. The talks aim to give Australia privileged access to these models, similar to the US computing ecosystem at Pine Gap. Australia is competing for access as the US has created a voluntary review system for new models. Labor sees huge opportunities in building resilience and leverage for Australia in an AI arms race between the US and China.

The federal government's proposed mandate for new data centres to minimise water use and maximise energy efficiency has been met with opposition from the Queensland and Northern Territory governments. The Australian Energy Market Operator warns that data centres are expected to use about 10 per cent of the electricity in Australia's grid by 2050, while a report from S&P Global forecasts Australia's data centre capacity could more than double over the next five years.

DeepSeek, a Hangzhou-based start-up, plans to build a massive AI data centre in Ulanqab, Inner Mongolia, adding 1 gigawatt worth of compute capacity, about 350 kilometres north-west of Beijing.

Amazon's shares surged more than 15% after it reported a fifth quarter of cloud revenue growth, with CEO Andy Jassy saying 'We're unusually well-positioned for this AI inflection'. This boost offsets Apple's drop in the market, where six out of seven megacap US tech companies have reported results. The consensus is that there's more reason to be positive than negative about the profitability of artificial intelligence investments.

Apple shares fell nearly 10% on Friday after a disappointing forecast showed the iPhone maker was struggling to secure enough components due to the AI-driven data centre boom straining global supply chains. This drop would erase nearly $US500 billion ($711 billion) from Apple's market capitalisation, potentially returning the crown of the world's most valuable company to AI chip giant Nvidia.

The top-performing ETF on the ASX in May was a space industry offering that soared by more than 30 per cent, before crashing-landing as June's worst performer, dropping 33.5 per cent. This is part of a broader trend where investors can jump on various themes such as quantum computing, video games, rare earths, clean energy, uranium and semiconductors through ETFs.