What’s the Story? AI Stocks, Crypto Downturn, Metals Selloff, SaaSpocalypse | Jim Bianco

Bankless Nation, the markets feel very chaotic lately. So, we brought on Jim Bianco, who is a repeat bankless guest, to tell us what the heck is going on. Before we get there, we got to shout out our friends and sponsors over at Kraken and their new DeFi product. It's called Defi Earn. It's all based right in the Kraken app, also called the Crack app.

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And now, let's go and talk to Jim Bianco to figure out what the hell is going on in the markets. All right, Jim, I saw your Twitter, so I know you watched the Super Bowl. I think you called it the worst Super Bowl ever. I tend to agree. But what did you think of the Coinbase commercial? That was also very controversial. Did you see it?

Yes, I did. I kind of liked it and kind of somewhat adjacent to crypto is I kind of like the Claude commercials, too. I thought that those were pretty funny as well. But you know I wouldn't quite go as far as to say it was the crypto or AI, you know, like we had a couple of years ago in 2022 or 2023, but it was I liked it. What about you?

Okay, so I was watching it with my family and the reaction was basically like everyone was singing along Backstreet Boys. They had no idea what it was. In the back of my mind, I was like, "This looks really similar to the previous commercial Coinbase Blade." So that was kind of out there. And then as soon as the song kind of ended and Coinbase logo shows up and it says, you know, crypto or whatever, my whole family looks at me and everyone groans.

So that was my experience with it.

I will say this about the commercials in general. I think that they're overproduced, and basically what it is is every commercial to me seems to be the same. Let's get a bunch of A-list celebrities, overpay them, overproduce 30 seconds of a big budget to try and make everybody laugh. And it's like there's 50 of them during the, you know, they're all the same thing. And they need to kind of get a little bit more creative. Kind of why I kind of like that one. I thought it was a little bit different.

That's true. Yeah, that I will say that about Coinbase commercials generally is they have zigged when everyone else has zagged. Speaking of a zigging and zagging market, Jim, yeah, there is just a bunch of stuff going on that I am confused about. I'm gonna call this section the the WTF was last week section.

There's just a bunch of different things that if they happened in a vacuum, I wouldn't otherwise need an expert like you to come on the show and give you analysis. But four big things, if maybe more, happened at once. One of them was SAS apocalypse. SAS apocalypse is just this name of this a fear-driven sell-off on the idea that AI is starting to look more like a substitute for software SAS companies instead of a feature that makes SAS better. So people are saying cloud code wiped $300 billion off global software stocks. That's just one.

AI capex, Google, Microsoft, Meta, Amazon all increased their forecasted AI capex spending in 2026 up to $700 billion. 60% increase from the previous year. That scared the market. We have precious metals volatility. Gold dropped 21% across four days. Silver dropped 50% across 7 days. And then of course in the crypto side of things, Bitcoin dropped 33% over 7 days hitting $60,000. Ether dropped 42% over that same period, getting as low as 1750. Fourth worst day of the decade in crypto price action.

Like I said, any one of these things happens in a vacuum. I'm like, "Okay, it was a bad day in the market, but four of these things all happened last week." And so therefore, I am confused. Jim, what the hell's going on?

All right, so let me let me start with SAS Apocalypse. Let me give my street cred. I subscribe to the pro version of every AI that exists right now. I use the pro version of every AI that exists. I'm also heavily into trying to create Agents with these AIs as well.

And let me start off by saying I think this is the biggest thing since the industrial revolution. I think this is way bigger than the invention of the internet right now. And I'll even give you as a prelude to some of this discussion. AI. Not only are we gonna get it and we're going to get it full force, we're going to want it, too.

Because in 2026, modern life is, let me let me describe modern life for all of us. We sit around on devices pushing buttons, tapping keys all day long, you know, trying to get a million things done out of our computer. Any, as you pointed out, any one of these things, go order something from Starbucks. Well, that's easy enough. But I got 450 other things I got to do at the same time.

And so if AI can help me do all of them simultaneously, I think it would be huge for us. And so therefore, I am embracing my AI overlord and I'm hoping that he comes and comes fairly soon to help my help my life.

Now, as far as SAS apocalypse goes, what happened with the software companies is very simple. We all SAS services software as a service we all in we being business you know it subscribe on a per seat basis for software whether it's a CRM a customer relations monitor from Salesforce or some kind of other program like Microsoft 365 or something like that.

Now the reason that they were able to get away with that pricing mechanism is because to create these programs I'll give you one example. Google Chrome their web browser 35 million lines of code is what Chrome is and it's pretty buggy free and that they actually have hundreds of engineers that work on it and on average they up they fix 180 bugs a day and have been for years which is why Chrome is such a good web browser.

That is hundreds of millions of dollars that they have invested in Chrome alone in order to get that program to work to the way it was. Now what's happened with AI is they have collapsed the price of software building. So there's a company called Curser. Curser basically ran an experiment about two weeks ago.

What they basically did was they gave basically a 100 pages of of of a prompt into the program and said here's basically Chrome described it in 100 pages create this. It ran for a week. It produced three million lines of Rust code and on the other side they got a c they got a browser. Now it's a little bit buggy. Doesn't quite do what Chrome is going to do.

But what stunned them was they said they spent about $150,000 in tokens to get this browser. That if you were to have asked a year ago how far how much would have long and how much would have cost us to get this far, it would have been tens of millions of dollars of of programmers, maybe a hundred programmers in at least a year.

And so what I think is happening with SAS apocalypse is not that software is going to go away is that their pricing mechanism is going to have to change that we're going to charge you per seat. We've can then raise the prices on you because we're dug in as a legacy program for you because the cost of creating software is going to collapse.

So are you going to create your own CRM and get rid of Salesforce? Probably not. But you know what? Somebody's going to raise some money as a startup and they're going to use AI and they're going to create what Salesforce has for a small fraction of the cost and they're going to come in and say get rid of Salesforce. Why? Cuz I'll charge you 10% of what fail Salesforce was charging you and deliver you the same product.

So that's what's happened to the SAS pro to the SAS is that their pricing model, their business model is under attack, not the existence of the software. And the reason is because the cost of producing software in the future is collapsing towards zero.

Now I would argue that crypto fell into that same trap. Crypto is programmable money. Crypto is software. If you actually overlay the S&P software index with Bitcoin or ETH looks the same. even though it's been diverging from the you know from the NASDAQ still kind of follows along with the software index because it's kind it's thought of as a version of software programmable money and since the price of software has collapsed I think that that got you know crypto got swept up in that as well too.

So though those are, you know, to answer your first two things, I think they're somewhat related.

Now, gold and silver, what's been happening with them? First of all, let's put those into perspective. If you added up the total value of stocks, bonds, and real estate across the world, gold and silver going back to last summer, it's like three or 4% the size of them. you know, at their peak two weeks ago, they were about 8 to 10% the size of them. So, relatively speaking, it doesn't take a lot of money to move gold and silver.

And so therefore, you know, you can have tremendous buying out of gold and silver and all of my friends on Wall Street are looking at each other going, "Who's buying? Who's buying? Who's buying because of this big rally?" You know, and I I would just say to them, you know, if they were buying stocks or they were buying bonds, it would require so much money to move them. You'd know who it was.

Well, the argument has come around that the buyer of gold and silver is Asia, primarily China, because if you look at the Chinese economy, and I'm a big bear on the Chinese economy, I think they're in trouble. And you look at some of the other Asian economies, primarily Japan because of their soaring interest rates. A lot of investors in those countries are worried and they were looking for places to hide and they looked towards the metals.

They also looked towards crypto a little bit too earlier this year, earlier in 2025, excuse me. And so they were, but they were the mate big buyers. So we're here sitting in the United States all looking at each other going, I'm not buying, you're buying and I'm not buying. And the price has been soaring. And the only people we could eventually identify in the US that was buying gold and silver was a bunch of DGens that were just following the trend, but they weren't creating the trend. I think it was largely created out of Asia.

What I think happened with that coincident with what we saw with the SAS apocalypse and everything is if you look at the volumes of gold and silver that was turning over, it went absolutely geometric, you know, in towards the middle later part of January that you were getting daily volume out of the out of the physical gold and silver markets equal to what four or five months ago was a month of volume. So there was just insane speculation.

And what does insane speculation means to use silver? Silver's like $82 right now. We're talking about everybody was buying 100 to 110. They were all buying it at 100 to 110. It went to 125 and they felt smart. And now that it's settled out at 82, they're all sitting there with a loss and they don't quite know what to do with it from here.

So I think that a lot of these things kind of came together all at once. I think the gold and silver one was a little bit of a of a coincident with the the software story.

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So, I painted Jim uh four stories. You know, precious metal metal, volatility, AI, capex, crypto, computation, SAS apocalypse. I'm not hearing from you that there is a coherent reason why these are all tied together. You know, markets are markets. So, you know, to some degree they are fundamentally intertwined, but really I'm hearing for the most part pretty compartmentalized, siloed market activity. There's no underlying common and denominator uh that's underpinning all of these.

Yeah. No, I don't think there is. I think you know the the one I didn't address was AI capex. I think that the concern with that what you're seeing with the market now is that as companies report more capex spending that it's getting a little bit nervous that there's that there might be too much capex spending and we're going to wind up with way too much capacity for what we're going to need in the future.

And that's typical throughout the history of of uh technology. If you go back and you look during 2000, um there was a company called Global Crossing and Global Crossing was one of the darlings of the 1999 tech rally and they were laying fiber optic cable around the world. A lot of that cable is still dark. It never was lit. It was never used. today.

You know, the other example people were using was in 1915. 1915, 111 years ago, there was 30% more railroad track in the United States than there is today. Even though the country's population was 40% less than it was today, and we move orders of magnitude more stuff. We overbuilt railroads is what we wound up doing. And so, what people are worried about is that we're overbuilding on the AI.

So, as they get more and more numbers that you start seeing that they're going to spend on capex, they're getting worried. By the way, the the one to get your could put your head around here is that Google announced that they're going to spend $200 billion in capex in 2026. The Russian military budget is $165 billion. So, they're spending more than the Russian army at this point. And that doesn't even count Meta and you know and Microsoft and the rest of them as well too. So yeah, that's why they're getting nervous about it.

So you're right, these are somewhat intertwined. But I think that the big thing that kind of excited markets more than anything else was the, you know, was co-work from Claude and Claude for Excel. And last week they they put up some prompts for claud for law and I think a lot of people started to it finally started to you know give them their holy [ __ ] moment. I get it. This stuff is easy. I could do a week's worth of work in half an hour with if I know how to use this product and it's going to change a lot of things. And I think that that's what kind of kicked it all off in in the and I think if you play with these products as I have, I definitely see that. I definitely see that I've already done it to for myself. Work that would take me several hours to do, I could get done in minutes right now because of what some of these AIs are able to do.

Can we talk about that? So AI capex, right? And we've you've talked about bubbles in the past that we've seen and I just used the B- word, which maybe maybe we shouldn't be doing at this point, but that is a question in investor's mind. They see the technology, they're using it. They see that it has the the ability to drastically lower the cost of building software. It has an effect on existing SAS companies, allows all of these competitors to to enter the fray.

But we know that um exciting technologies tend to get overinvested like global crossing like train tracks in the early 1900s. Where are we on that spectrum with AI? Have are we at the phase where we're investing too much capex where there's like we're overbuilding AI infrastructure and what do you think in 2026? Do you think we're in a bubble entering a bubble? What's going to happen there?

Well, on the last part, I don't know what a bubble is, you know, at this point. But I think to your point about this is that all technology goes through kind of two phases. And I'll use the internet as my example. Phase one is your infrastructure build. And in 99, I mentioned Global Crossings, JDS, Unif, Cisco. Cisco was the largest market cap company in the world at the time in 1999, making routers and switchers for the internet.

And everybody was playing the most overused term on Wall Street, the picks and shovels play, which was a a reference to the gold rush in California in 1849. And so they were all playing the these infrastructure play as they are today centered by Nvidia. By March of 2000, the over the um the infrastructure play got way overdone and we had a crash. The NASDAQ fell 77% over the next two years.

But as Jeff Bezos argued in a op-ed about 3 months ago, that was a good bubble. He referred to it as a bubble. He said it was a good bubble because what was left was the internet. Okay, we we overdid the investing in infrastructure and we left the world with the internet. What did the world do with the internet? We made companies and business models around the internet. Think Uber, think Facebook, you know, um you know, think um Google, think all of those companies that have been that have come beyond become and then we had a more sustained kind of content type of rally that lasted 15 years and and maybe you could argue is still going right now because of the internet.

Well, the overlay that people are using with AI is we're overdoing the infrastructure play. And the infrastructure play is even getting on to energy and everything else. We got to buy nuclear stocks, buy uranium because we need that to fund the energy needs for for everything. And when that peaks and goes down, and this is why I said I don't know what a bubble is. I get it that we might have overdone the infrastructure play. We're going to leave the world with AI.

There's going to be data centers running AI when the infrastructure play goes. And there's going to be people like Anthropic and like others that are going to look at these tools and they're going to raise money as a startup and say I could compete with Salesforce or I could compete with JP Morgan or I could compete with whoever because to spin up the software that I need to compete with them is going to be a fraction of the cost that they spent and I will have a much lower cost basis and be able to walk into people and say, "I can give you the same thing." Well, why would I want to change to you? Because I could give it to you at much less price. That's why you want to change to me.

And that's where the that that's where I think the the bigger rally from this technological boom of AI is going to come from is when we get those content companies coming. Now, we're not there yet. Maybe anthropic with agentic AI is the beginning of that. I mean, Aenta has been around, but seems like Wall Street's kind of discovered it in the last 45 or 60 days as being a potential threat or gamecher, but I think that that's where we're going to be going with this.

So, it's not going to be about in the future, like in a year or two, about what new chip does Nvidia make. It's going to be about what new idea has somebody raised money on that they're going to use AI to build what for what cost spaces or maybe whole new things that we haven't even thought of. And that's why I think that, you know, we want we we need AI. I think it's going to be good for us in the long run.

And I say that because everything I read is all gloom and doom. We're all going to be unemployed and Elon's robots are going to do everything. And what are we going to do with ourselves? and how are kids that are graduating from college going to get new jobs and stuff like that? Uh that stuff will sort itself out. It it always does when you get new technologies because new technologies create new industries. They create new jobs.

The history of new technology is it's a net creator of jobs. It's not a destroyer of jobs. Now the risk is that the job loss comes first. The job creation comes second and in the middle there's a lot of angst and unhappiness that you get as you go through that transition. But the people that are best equipped to deal with that transition are younger people because they're not encumbered by legacy. They're not encumbered by business models that have been in place for a long time.

That's why I like to say all new technology companies are always, you know, CEOed by somebody who's 35 years old and all old legacy companies are CEOed by somebody who's 70 years old because the legacy company's business models don't change. And so I worry more about the over 60 crowd. And I say to the over 60 crowd being one of them because I'm over 62, your business model that you've spent your career is about to dramatically change. Are you ready to reinvent yourself? I know 28-y olds are ready to reinvent themselves. I don't know if 68-y olds are ready to reinvent themselves.

So that who I think is so I'm kind of coming at this and saying I think it's the opposite. Everything I read is kids are graduating from school and they're never going to get jobs because of AI. I'm like no, they're going to get jobs and they're going to show you how the businesses work and they're going to push the 68 year olds to the curb because they're not going to be able to adjust to this new business model that we have coming.

Jim, I think you'll have a lot of listeners that actually buy the narrative that uh you just gave in the explanation. I I think I'm probably one of them. But let's talk about that because that does not necessarily imply that you should own NASDAQ as an investor at S&P. And so let's talk about what happened in the era of the internet exactly as you described. Let's say an analog is happening right now. It would have been great to sell Cisco in 2000, to sell the NASDAQ in 2000 once you started to identify this overinvestment in infrastructure and then to go back and buy the app layer say in 2022 once some of the dust had settled. Sorry, 2002 once some of the dust had settled. So pick up an Amazon, pick up a Google, that would have been the max best way to actually play that.

And so at some level there's a lot of people listening and they they get what you're saying. They actually agree with it, but then they're asking the confusion that I have right now and maybe the market is trying to sort this out too is like, okay, what should I buy? Cuz ideally, I want to time some of those things or try to time some of those things. I want to sell NASDAQ and S&P once it gets overheated on the infrastructure level, let the market reset and then redeploy into the app layer a little bit later. let's say it plays out in the same way as the internet.

So, it's still kind of a a question in my mind of like if everything that you say is true, how do you allocate to stocks and to tech companies right now? At at the other side of things, it is so painful to be out of the market when you see the stuff that these AI companies are dropping on almost a weekly basis. you're like, "This is quite obviously the future and I need to own that or become like another meme part of the permanent underclass, right? If I don't own these capital assets, then like I don't have any of this exposure." And so I think a lot of investors are uncertain as to what to what to do with this. And maybe maybe your answer is you just buy and hold through the volatility, but like what do you think?

Well, a couple of things real quick. Cisco peaked in 2000 and here we are in early 2026. It's still lower than its peak in 2000. So 26 years later and it hasn't yet it's marginally taken out the high a couple of times but it's still below that 2000 peak today um right now. So I mean you know that I think is the risk that an Nvidia has is that whenever it peaks maybe it's now maybe it's in three years that might be it for a generation uh in terms of its peak if you follow that model.

And the other thing is you said every day about dropping this stuff. I'm uh you know uh and Dropic dropped Opus 4.6 to uh last Friday and everybody was wowed by it and 20 minutes later we got codeex 5.2 from open eye. So you can't even go an hour without having another another one. They we're going hyper speed with this. In fact, I heard somebody say to me that this technology is advancing so fast that if you asked AI how to use AI, it's behind right now and telling you how that you're supposed to use it. They can't keep up with it right now.

So, this is very difficult. Now, to your question about investing, you're right because the app layer is to come. It doesn't exist yet or it's just in its infancy of being existing. So the companies that are going to start building on the app layer are going to be either startups or they're not quite startups. They're probably still in uh you know there's probably still in graduate school you know putting together ideas of how to do how to use this stuff or as one friend of mine joked they're still in seventh grade gym class and we got to have to wait a couple of more years before they start putting together these apps.

So what's Wall Street been doing is you've seen the broadening of the rally in the stock market. Meaning that as the technology and software companies have been struggling, the traditional companies have been rallying. So the Russell 2000, the value stocks have been going up, the midcap stocks have been going up under the a idea that these companies all spend a lot of money on legacy software and they're going to get relief from the money that they spend on legacy software.

Maybe AI is not going to change a Proctor and Gamble's business model right away or a General Motors business model right away or an Exxon's business model right away. But what they are going to be able to come into an Exxon to do is say look at how much money you are spending on accounting software on CRM software on analysis software. How many how many thousands of subscriptions do you have to Microsoft Office? On and on and on. here, I can give you something for a lot less and save you tens of millions of dollars.

So, that's why they're starting to buy into that argument. That's all they've got right now. But, you're right, the app layer is coming with a lot of this stuff. And it's also got to be coming too because of what I just said. If we can't go an hour without getting another upgrade to a previous upgrade and AI can't tell me how to use AI properly because it can't keep up, then we're not quite there yet in terms of putting out the app layer because it's too difficult to try and build on this stuff because it's constantly changing and stuff like that, but it's coming. It's definitely coming in a big way.

Yeah, Jim, we recently had Lyn Alden on the podcast. Her episode actually comes out after yours. yours the from the time of recording we're going to release this podcast tomorrow. Um she said something that was pretty interesting to me and it was about the nature of where the value of this whole revolution occurs and some of the data that we have here is well we know Amazon Meta Google Capex spending is just through the roof. So they're not they're not saving any money. They're not they're not capturing any value because they're just spending it all building out capacity.

Open AI, Anthropic, all the AI labs spending buku bucks trying to just finish this AI race, get to the AI. They're not they're not making any money either. They're still in their growth phases, but they're not making any money. And so, it really begs the question, it's like, all right, like where all where is all this value going at the end of the day? Lynn said something pretty interesting that I want to get your opinion on, which is that the the equity value or the value itself really ends up in the hands of the consumers, the people using the products who can build apps.

And I don't know if she said this specifically, but this has just been a conversation, a conversation that I had with my brother-in-law, and this, you know, emblematic of many other conversations I've had. He said, your brother-in-law is a I assume your brother-in-law is a normie. He's not involved in the crypto space or he's in he's in healthcare tech. He's in healthcare tech, so he's tech oriented, but like still.

Yeah. And he's he's like eight years older than me. And he goes, "Man, I wish I was either, you know, 20 years younger or 20 years older. I either want to be retired right now so I don't have to deal with AI or I want to be 20 years younger so I could like adapt to it." And like the the idea here is like really the equity value isn't like Amazon's spending everything. All the ka the a the big hyperscalers are spending all of their money. The AI labs are in hyper competition. Where does all the value acrew? It occurs to the users using the product who are going to make something valuable. Do you have any sort of thoughts or reflections about that if that makes sense to you or or where you think this is really pushing the the value?

It makes a perfect sense and you know I think yes exactly it acrru to the user the user right now on AI is largely a business and it's largely trying to take business tasks accounting compliance analysis that kind of stuff and making that e easier and simpler and cheaper and so that's why you're seeing those stocks start to rally you're going to be the winner Proctor and Gamble and General Motors and Exxon from this AI race because you're going to get cheaper products and better products in order to accomplish the goals of what you want to do with your business model.

And the problem that you're seeing with the spend on the other side is a lot of these companies are starting to realize this is a race to win and there is no second place and there's no participation trophy. As a matter of fact, that has been the biggest complaint you've heard out of tech about Apple. Apple is trying to do the Apple model, right? We're going to sit back. we're going to let everybody else beat themselves up and then we'll just show up like they did with the iPhone, right? You know, Nokia invented the smartphone. You had the Palm Pilot, you know, through throughout the late 90s and early 2000s. And then eight or nine years later, here comes the Apple iPhone 1 and just took all the business away from them.

And Apple is trying to recreate that kind of mentality. Ah, let the rest of them kill themselves. we'll show up in 2029 or 2030 and we'll wow your socks off what we'll do with AI and we'll take it all away from them. And I think the market is saying you did it with the with the iPhone, but I don't think you could do it with AI. And that's why Apple stock and Apple's, you know, critic the criticism of Apple is coming in. So I understand why these companies are doing it because there is no second place. You've got to try and be the winner here. And we have to keep going and going until we're spending more than the Russian military in order to try and win this ma this match that we're doing right now cuz there there is nothing left for us if we don't.

What do you think that means for the distribution of assets in the like S&P 500 for example? Like over the last three years, as I have understood it, the trend has been to a concentration of the S&P 500 in a very low number of companies. Like after after Nvidia, Amazon, Microsoft, like the rest of the S&P 500 is