AI Trade Dominates Markets Amid Geopolitical Shifts and Infrastructure Challenges

Bloomberg Tech · January 05, 2026 · Listen to Original Episode →

Original Title: Tech Traders Shrug Off Maduro Ouster

TL;DR

The market's indifference to the Maduro ouster suggests a focus on the AI trade, indicating that geopolitical events are secondary to technological advancements in driving investor sentiment.
Geopolitical shifts, like the Maduro situation, may strategically position the US for future trade talks with China, particularly concerning rare earth minerals and AI chips.
The AI trade's resilience, despite historical bubble comparisons, is supported by solid fundamentals and a broadening market rally, suggesting sustained growth rather than an immediate pop.
Infrastructure constraints, including land, power, and supply chain limitations, pose significant choke points for AI build-out, requiring long-term planning through 2030-2032.
Federal AI regulation is unlikely to materialize quickly, potentially leading to a patchwork of state laws that could stifle innovation and disproportionately affect smaller companies.
The global race for AI dominance, particularly against China, necessitates a strategic approach to regulation and chip exports to maintain US technological leadership.
Tesla's declining 2025 China shipments, despite a December uptick, highlight increasing competition and demand issues in the global EV market, with BYD emerging as a dominant player.

Deep Dive

The market is demonstrating resilience, largely shrugging off significant geopolitical events to focus on the AI trade as 2026 begins. This optimism is fueled by the perceived strategic advantages the U.S. has gained, particularly concerning energy resources and potential leverage in future trade negotiations with China, while also grappling with the complex challenges of AI regulation and infrastructure demands.

The ouster of Venezuelan President Nicolas Maduro, and his subsequent arrival in New York to face narco-terrorism charges, has been largely disregarded by the stock market, which is instead prioritizing the AI sector's growth. This geopolitical event, however, is seen by some as strategically beneficial for the U.S., potentially altering the global energy landscape and strengthening its position in upcoming trade talks with China. The implications extend to Taiwan, where the U.S. action is viewed by some as a signal of resolve against potential Chinese aggression, though others see it as a potential template for Beijing. This, in turn, highlights Taiwan's critical role in the global advanced chip supply chain, making any disruption catastrophic.

The AI trade's momentum is underpinned by strong fundamentals from major tech companies, though concerns about a potential bubble persist, tempered by historical comparisons showing lower percentage gains and a broadening rally beyond just a few dominant stocks. The demand for AI infrastructure, particularly advanced chips and the computing power to support them, is driving significant investment in data centers, though these operations face constraints in land, power, and supply chains, requiring long-term planning. The competitive landscape for AI hardware is intensifying, with companies like AMD seeking to gain ground on Nvidia, particularly in the inference phase, while the broader market continues to experiment with AI software solutions, with a focus on developing "sticky" applications.

The regulatory environment for AI remains fragmented, with a push for federal oversight to counter a growing patchwork of state-level regulations that could stifle innovation. This regulatory uncertainty, coupled with infrastructure limitations and the global race for AI dominance against China, presents significant headwinds for the sector. Meanwhile, Tesla's performance in China shows a decline in overall 2025 shipments despite a December uptick, reflecting increased competition in the electric vehicle market.

The key takeaway is that while geopolitical events are being sidelined, the underlying drivers of the AI trade--technological innovation, strategic resource control, and the race for global AI supremacy--are creating both immense opportunity and complex challenges that will shape markets and international relations for years to come.

Action Items

Audit AI chip supply chain: Identify 3-5 critical dependencies (e.g., specific memory chips, fabrication equipment) and assess geopolitical risks for each.
Design AI infrastructure resilience plan: Define requirements for power, cooling, and land acquisition for 3-5 future data center sites, anticipating 2028-2030 demand.
Track AI software adoption stickiness: Measure integration depth and customer retention for AI software solutions across 5-10 pilot programs to identify long-term viability.
Evaluate AI regulation impact: Analyze potential contradictions and burdens of state-level AI regulations on 3-5 core business processes and propose a unified compliance strategy.

Key Quotes

"The market shakes off that geopolitical risk thus far we're up more than a percentage point on the nasdaq we're looking more towards an ai trade we go under the hood there is search for safety you have seen gold rebound remember it sold off hard into the new year trade bitcoin currently up 2 9 as we see not just digital gold on the higher side that's at 93 000 but spot gold at 2 7 higher i'm looking at the us dollar currently trading flat but we had seen significant moves in the us dollar more broadly and we want to go to that macro level event right now because venezuelan president nicolas maduro and his wife celia flores will face trial that is on narco terrorism charges in new york in the afternoon"

This quote highlights the market's immediate reaction to a significant geopolitical event, demonstrating a focus on the "AI trade" over perceived risks. The author, Caroline Hyde, points out that despite the ouster of Venezuela's president, market indicators like the Nasdaq, gold, and Bitcoin showed resilience or growth, suggesting investors are prioritizing technological advancements over geopolitical instability.

"well you know throughout 2026 we're supposed to be talking with china about tariffs and at the center of those tariff and trade talks really is rare earth minerals ai chips all of those things right and so if you're china and you're looking at the development over the weekend and you realize that in terms of natural resources the us has taken control over a lot of the oil that they will need as well it sort of changes the game and who has the upper hand in some of these these talks that we're expecting to be in 2026 so i think this puts you know strategically speaking the us in a more powerful position in some of these trade talks so it'll be interesting to see how this all pans out in terms of rare earth minerals and of course china buying potentially nvidia chips as well"

Anna Rathman explains how the geopolitical developments, specifically the US taking control of oil resources, could influence future trade negotiations with China. Rathman suggests this strategic shift could empower the US in upcoming talks concerning critical resources like rare earth minerals and AI chips, potentially altering the balance of power in global trade discussions.

"yeah i think 2023 is still going to be a picks and shovels year building these things out and the demand there is for it i i that's not something that can be done in a year or two i think this is a multiple year story and certainly on the software side there's a lot of experimentation still and if you're a customer sort of subscribing to some of these things and dipping your toes in there's no guarantee that that's going to be sticky i mean i think we're thinking about things like sas where if you have a subscription to something and you incorporate those software into your day to day it becomes super sticky i don't think that's necessarily where we are with the software on the ai side i think people are experimenting so until we can see some stickiness and real incorporation and integration of those software into the day to day of the businesses i would be a little bit skeptical as well and i think that's what the markets are actually expressing"

Anna Rathman characterizes the current phase of AI development as a "picks and shovels" period, emphasizing the foundational build-out required. Rathman expresses skepticism about the immediate stickiness of AI software adoption, contrasting it with more integrated Software as a Service (SaaS) models, and suggests that market sentiment reflects this experimental stage rather than widespread, ingrained usage.

"well there are different schools of thought that you mapped out right there one is from inside china there is the nationalist perspective that look this offers us a roadmap perhaps of how we could retake control of the self governed island of taiwan which officials in beijing view as a rogue province as one that they should bring back into the fold meanwhile in taiwan and taipei officials there are actually finding some encouragement from the us move in venezuela as perhaps a way of signaling deterrence against beijing to try to do anything similar there and they see it that way for two reasons one they find that the us has military superiority over china in this area china would not be able to pull off the same kind of maneuver that the us just did on saturday in caracas now and the other reason is that they see that this signals that trump will exercise us military power when he sees american strategic interests at risk and they certainly would be if china moved against taiwan which is a linchpin in the global chip supply chain"

Mike Sheffield outlines contrasting perspectives on the geopolitical implications of the US action in Venezuela, particularly concerning China and Taiwan. Sheffield explains that while some in China may view it as a potential roadmap for Taiwan, officials in Taiwan see it as a deterrent, believing the US possesses military superiority and a willingness to act when strategic interests are threatened, especially given Taiwan's critical role in the global chip supply chain.

"well they still see taiwan as so essential to being able to support a wide range of industries especially the growing one on which they have placed so many bets and that is artificial intelligence taiwan far and away right now is the world center of production of the most advanced ai chips even with all the investment in production that has planned for the us in coming years much of that is not online yet and is really still being produced in taiwan on the self governed island so any disruption to that supply chain would be catastrophic especially for political reasons if we saw any sort of military action by beijing against the island it would be disruptive and carol we remember during the pandemic just how problematic those dislocations in the supply chain were and how they rippled through to the automotive sector and others and that of course was before the advent of artificial intelligence and chat gpt and the wide scale uptake that we're seeing across the economy of this revolutionary new technology"

Mike Sheffield emphasizes Taiwan's crucial role in the global AI chip supply chain, highlighting that any disruption, particularly from military action by Beijing, would be catastrophic. Sheffield draws a parallel to the supply chain issues experienced during the pandemic, noting that the impact would be far more severe now given the widespread adoption of AI technologies like ChatGPT.

"yeah so i think the executive order that you mentioned earlier by president trump was in one part trying to get some of that done without congressional action that's probably not going to be a very successful plan but i think also part of it was trying to create some political pressure for congress to take on this responsibility and act in place of as you described a patchwork of 50 state regulations there were a thousand of them introduced or passed or considered just last year and often they're contradictory often they're heavy handed some of them might make sense but not all of them do and to ask us ai entrepreneurs to operate in that environment is very unrealistic"

Jessica Malusion discusses the challenges of AI regulation in the United States, referencing a presidential executive order aimed at addressing a "patchwork" of state regulations. Malusion argues that this approach, without congressional action, is unlikely to be successful and highlights the impracticality for AI entrepreneurs to navigate a landscape of potentially contradictory and heavy-handed state laws

Resources

External Resources

Books

"Here's Why" by Bloomberg Journalists and Analysts - Mentioned as a podcast that explains one new business story each week.

Articles & Papers

"AI Isn't Taking Your Job" - Mentioned as a topic covered by the "Here's Why" podcast.

People

Anna Rathman - Founder and CEO of Grenadier Advisory, providing an investor's perspective on market reactions.
Barry Pollack - Attorney representing Nicolas Maduro, also represented Julian Assange.
Caroline Hyde - Co-host of Bloomberg Tech.
David Wilstrom - Attorney representing the brother of Juan Orlando Hernandez.
Donald Trump - Former President of the United States, mentioned in relation to executive orders and potential future actions.
Ed Ludlow - Co-host of Bloomberg Tech, reporting from Las Vegas.
Elon Musk - Mentioned in relation to Tesla and competition in the EV market.
Jenssen Huang - CEO of Nvidia, mentioned in relation to CES keynotes and AI innovation.
June Grasso - Host of the Bloomberg Law Podcast.
Karen Moscow - Co-host of Bloomberg Daybreak.
Lisa Mateo - Co-host of the Bloomberg Surveillance Podcast.
Lisa Su - CEO of AMD, mentioned in relation to CES keynotes and AI competition.
Mark Winterhoff - Interim CEO of Lucid, scheduled for an interview.
Marsha Blackburn - Mentioned in relation to potential AI regulation.
Mette Frederiksen - Prime Minister of Denmark, mentioned in relation to NATO and Greenland.
Mike Sheffield - Bloomberg Senior Tech Editor, providing global geopolitical perspective.
Miles Miller - Bloomberg correspondent reporting from Brooklyn and Lower Manhattan on the Nicolas Maduro case.
Nathan Hager - Co-host of Bloomberg Daybreak.
Nicolas Maduro - Ousted President of Venezuela, facing narco-terrorism charges.
Ozara - Auto Editor at Greater Data.
Paul Sweeney - Co-host of the Bloomberg Surveillance Podcast.
Peter Elstrom - Bloomberg Tech Executive Editor, discussing TSM C and Hon Hai.
Rembert - Author of the Hyperdrive newsletter, discussing Tesla's China shipments.
Roland Busch - CEO of Siemens, mentioned as a CES speaker.
Ryan Malloy - CEO of Flexential, discussing data center operations.
Celia Flores - Wife of Nicolas Maduro, facing narco-terrorism charges.
Stephen Carol - Host of the "Here's Why" podcast.
Ted Cruz - Mentioned in relation to AI legislation.
Tom Keen - Host of the Bloomberg Surveillance Podcast.

Organizations & Institutions

AMD (Advanced Micro Devices) - Mentioned in relation to AI competition and PC market presence.
Apple - Mentioned as a customer of TSMC and a company whose products Hon Hai manufactures.
BYD - Mentioned as a competitor to Tesla in the EV market.
Bloomberg Audio Studios - Producer of podcasts.
Bloomberg Law Podcast - Podcast providing analysis of legal stories.
Bloomberg Surveillance Podcast - Podcast offering market analysis and expert conversations.
Bloomberg Tech - Podcast and broadcast covering technology news.
California - Mentioned as a state with proposed AI regulations.
Center for Technology and Innovation - Organization associated with Jessica Malusion.
China - Mentioned in relation to trade, tariffs, rare earth minerals, AI dominance, and potential actions regarding Taiwan.
Competitive Enterprise Institute - Non-partisan policy group associated with Jessica Malusion.
Colombian Cartel - Mentioned as an organization federal prosecutors allege Maduro intended to benefit.
Dell - Mentioned as a company using AMD's gear.
Danish - Referring to Denmark and its national TV network.
ELN - Mentioned as a terrorist organization federal prosecutors allege Maduro intended to benefit.
European Union (EU) - Mentioned in relation to its AI regulatory regime.
FAR C - Mentioned as a terrorist organization federal prosecutors allege Maduro intended to benefit.
Federal Court - Location where Nicolas Maduro and his wife are facing charges.
Flexential - Privately held data center operator in the United States.
Foxconn (Hon Hai) - Manufacturer of iPhones for Apple and servers that include Nvidia chips.
Global Chip Supply Chain - Mentioned as crucial to the US economy and national security.
Goldman Sachs - Raised its price target for TSMC.
Google - Mentioned as a hyperscaler boosting spending and in relation to its Gemini iterations and TPU innovations.
Grenadier Advisory - Advisory firm founded by Anna Rathman.
Honduras - Former president of Honduras mentioned in relation to David Wilstrom's representation.
Hon Hai - Reported financial details for the fourth quarter, revenue up 22%.
Hyperdrive Newsletter - Newsletter authored by Rembert.
Intel - Mentioned as a potential competitor in the AI space.
Las Vegas - Location of CES.
Lucid - EV company mentioned as a competitor to Tesla.
Microsoft - Mentioned as a hyperscaler boosting spending.
NATO (North Atlantic Treaty Organization) - Mentioned in relation to Denmark and Greenland.
New York - Mentioned as a state with proposed AI regulations.
New York Court - Location where Nicolas Maduro is facing trial.
Nvidia - Mentioned in relation to AI chips, market share, and CES keynotes.
Oracle - Mentioned in relation to its performance in 2025 and investor scrutiny.
PFF (Pro Football Focus) - Data source for player grading.
Pro Football Focus (PFF) - Data source for player grading.
Russia - Mentioned as a seller of oil and in relation to energy supply.
S&P 500 - Index mentioned in relation to market analysis.
Samsung - Mentioned in relation to memory chips and validation.
San Francisco - Location where Ed Ludlow is based.
Seirra AI - AI-powered customer experience platform.
Siemens - Mentioned as a CES speaker.
Sinaloa Cartel - Mentioned as an organization federal prosecutors allege Maduro intended to benefit.
Supermax Prison - Potential incarceration location for Nicolas Maduro if convicted.
Taiwan - Mentioned in relation to China, chip supply chain, and US resolve.
Tesla - Mentioned in relation to China factory shipments, EV demand, and competition.
The Zetas - Mentioned as a terrorist organization federal prosecutors allege Maduro intended to benefit.
Tsmc - Shares climbed due to optimism over AI demand.
Unexpected Points - Newsletter run by Kevin Cole.
US Dollar - Mentioned in relation to currency trading.
US Stocks - Mentioned in relation to market performance.
Venezuela - Mentioned in relation to Nicolas Maduro's ouster and oil control.
Vpns - Mentioned as a tactic used to circumvent rules.

Research & Studies

AI Regulatory Regime (EU) - Mentioned as being larger than the EU's AI sector.

Tools & Software

Sierra AI - Leading AI-powered customer experience platform.

Websites & Online Resources

Apple Podcasts - Platform where Bloomberg podcasts can be found.
Bloomberg.com - Website where Bloomberg content can be accessed.
Spotify - Platform where Bloomberg podcasts can be found.

Other Resources

AI Trade - Market trend discussed in relation to tech stocks and optimism.
AI-driven Market Rally - Discussed in historical context with comparisons to past equity bubbles.
AI Chips - Central to US-China trade and tariff talks.
AI Regulation - Discussed in the context of federal vs. state approaches and potential stifling of innovation.
AI Bubble - Topic of discussion regarding the market's current state.
AI Accelerators - Market where AMD aims to compete with Nvidia.
AI Agents - Described as impressive, working 24/7 to solve customer problems.
AI Gear - Demand for this is increasing.
AI Innovations - Mentioned in relation to US advancements and competition with China.
AI Bubble - Discussed in relation to historical equity bubbles and market fundamentals.
AI Trade - Mentioned as a resilient market trend.
AI-Infused Software - Described as a category where Palantir operates.
AI Consumption Model - Seen as having a long runway for growth.
AI Regulation - Discussed in the context of federal vs. state approaches and potential stifling of innovation.
AI Chips - Central to US-China trade and tariff talks.
AI Trade - Market trend discussed in relation to tech stocks and optimism.
AI-driven Market Rally - Discussed in historical context with comparisons to past equity bubbles.
AI Regulation - Discussed in the context of federal vs. state approaches and potential stifling of innovation.
AI Bubble - Topic of discussion regarding the market's current state.
AI Accelerators - Market where AMD aims to compete with Nvidia.
AI Agents - Described as impressive, working 24/7 to solve customer problems.
AI Gear - Demand for this is increasing.
AI Innovations - Mentioned in relation to US advancements and competition with China.
AI Bubble - Discussed in relation to historical equity bubbles and market fundamentals.
AI Trade - Mentioned as a resilient market trend.
AI-Infused Software - Described as a category where Palantir operates.
AI Consumption Model - Seen as having a long runway for growth.
AI Regulation - Discussed in the context of federal vs. state approaches and potential stifling of innovation.
AI Chips - Central to US-China trade and tariff talks.
AI Trade - Market trend discussed in relation to tech stocks and optimism.
AI-driven Market Rally - Discussed in historical context with comparisons to past equity bubbles.
AI Bubble - Topic of discussion regarding the market's current state.
AI Accelerators - Market where AMD aims to compete with Nvidia.
AI Agents - Described as impressive, working 24/7 to solve customer problems.
AI Gear - Demand for this is increasing.
AI Innovations - Mentioned in relation to US advancements and competition with China.
AI Bubble - Discussed in relation to historical equity bubbles and market fundamentals.
AI Trade - Mentioned as a resilient market trend.
AI-Infused Software - Described as a category where Palantir operates.
AI Consumption Model - Seen as having a long runway for growth.
AI Regulation - Discussed in the context of federal vs