InvestMacro

Three investors reached out to me this week with an identical query: “Are you concerned?”

In our January edition of Disruption Investor, our primary advisory service, we forecasted that another DeepSeek-like event would rattle Wall Street and cause artificial intelligence (AI) stocks to plummet. This was our key prediction for 2026, and just last week, it materialized.

A Chinese AI laboratory unveiled Kimi K3, a model that equaled the performance of top American models and surpassed them in impartial coding assessments, all at approximately one-third the cost. The most significant aspect? Kimi K3 is an open-source model, eliminating the need for a pricey monthly subscription.

Wall Street reacted swiftly, initiating a sell-off of AI stocks. The well-known Roundhill Memory ETF (DRAM:BATS), which includes memory chip stocks, tumbled over 30% from its peak. CoreWeave (CRWV:NASDAQ), the biggest dedicated AI cloud, saw its value halved. On Friday, Nvidia Corp. (NVDA:NASDAQ) temporarily relinquished its position as the world’s most valuable company to Apple Inc. (AAPL:NASDAQ).

The rationale behind the sell-off is straightforward: if a Chinese laboratory can offer AI for free, no one will pay American labs for it. If AI generates no revenue, the approximately $750 billion that Microsoft Corp. (MSFT:NASDAQ), Alphabet Inc. Class A (GOOGL:NASDAQ), Amazon.com Inc. (AMZN:NASDAQ), and Meta Platforms Inc. (META:NASDAQ) intend to invest in AI infrastructure this year represents the most significant capital waste in history. As a result, investors are offloading chips, data centers, big tech stocks, and anything even tangentially related to AI.

In my opinion, this will prove to be the investors’ costliest blunder in 2026.

On January 27, 2025, a relatively unknown Chinese laboratory called DeepSeek launched R1, a cutting-edge AI model it claimed to have trained for under $6 million – a pittance compared to the billions American labs were investing. The market deduced that America was drastically overspending on AI. Consequently, Nvidia plunged 17% in a single trading session, shedding $600 billion in market value – the most significant single-day loss for any company in stock market history.

It appeared that the AI spending boom had concluded. Can you predict what transpired next? Nvidia’s revenues more than doubled.

Two years ago, Google processed fewer than 10 trillion tokens per month. Today, that figure stands at 3.2 quadrillion – the equivalent of a dense novel’s worth of AI-generated text for every person on Earth, each month.

Anthropic’s annualized revenue skyrocketed from $1 billion to $47 billion in just 17 months. No company in the history of capitalism has experienced such rapid growth.

Affordable intelligence ultimately propelled AI demand to new heights. If you sold on DeepSeek Monday, you exited the AI trade at the precise moment its fundamentals went vertical.

English economist William Stanley Jevons observed a peculiar phenomenon: as steam engines became significantly more efficient, extracting more work from each lump of coal, coal demand should have decreased. Instead, it surged. Cheaper steam power meant that it suddenly became worthwhile to employ steam power everywhere. The total amount of coal consumed increased rather than decreased.

The same phenomenon occurred with light. LED bulbs reduced lighting costs by approximately 90%, leading us to illuminate everything.

Economists refer to this as the Jevons Paradox. When a useful commodity becomes cheaper, the world discovers a multitude of new applications for it and spends more.

The same applies to AI.

In late 2022, GPT-4-level intelligence cost around $20 per million tokens. Today, that same level of intelligence costs a mere 40 cents! Did AI spending decrease? No.

Uber Technologies Inc.’s (UBER:NYSE) CTO recently admitted that the company exhausted its entire 2026 AI budget in just four months. Each Uber engineer now incurs $500–$2,000 per month in AI expenses. Apple allows engineers to spend $300 per day on tokens. The most AI-intensive companies currently spend $7,500 per employee every month on AI.

I’m personally investing over $200 per month on Claude, and it’s worth every cent.

This is the Jevons Paradox in action. The more affordable AI becomes, the more we utilize it.

Kimi K3 may be open-source, but running it still necessitates costly data centers equipped with Nvidia GPUs and high-bandwidth memory from companies like Micron Technology (MU). It also requires megawatts of electricity to power everything. Starting Monday, Kimi K3’s “recipe” will be freely available for download. However, the “kitchen” needed to run it – 1.5 terabytes of scarce high-bandwidth memory across racks of Nvidia GPUs – is not.

Don’t just take my word for it. Within days of launching K3, the company behind it, Moonshot, stopped accepting new members. Why? It ran out of GPUs. The lab that just “killed” demand for AI can’t secure enough compute resources to support its own free model.

So, no, I’m not concerned about this sell-off.

I’m approaching it the way DeepSeek should have been approached: as an opportunity. A chance to acquire the toll roads of the AI boom at discounted prices – the bottlenecks that get paid regardless of which model tops the leaderboard.

Compute. Power. Memory. Chip-making machines. And all the other vital layers of AI infrastructure we’re investing in through Disruption Investor and Disruption_X.

I recommend you do the same. If you liked this, please consider joining my free investing letter, The Jolt, here.

For decades, the U.S. defense conversation focused on jets, missiles, ships, and software — the visible hardware of military might.

What almost nobody talked about was the industrial engine underneath it all…

The Quiet Machine Behind American Power

The mines, processors, refiners, manufacturers, and logistics chains that turn rocks in the ground into weapons, infrastructure, and strategic leverage.

But that engine now has a name that’s finally entering the public conversation: the U.S. Defense Industrial Base Consortium.

At its core, the Consortium exists to strengthen, coordinate, and secure the Defense Industrial Base — often shortened to the DIB.

You can think of it as the full ecosystem of companies that supply materials, components, technology, and production capacity essential to U.S. national defense.

This includes not just traditional defense contractors, but the upstream producers that make everything else possible.

And in today’s geopolitical reality, upstream means minerals.

Why Washington Suddenly Cares About Where Materials Come From

For years, globalization made supply chains cheap, efficient, and fragile. Critical inputs were sourced wherever costs were lowest, often from geopolitical rivals.

That worked… until it didn’t.

Trade wars, sanctions, hot conflicts, cyber warfare, and industrial espionage exposed a dangerous truth…

The U.S. military cannot be stronger than its weakest supply chain link.

When rare earths, uranium, silver, or specialty metals come from hostile or unstable jurisdictions, national security becomes a hostage to foreign policy.

The Defense Industrial Base Consortium was built to fix that problem.

Its mission isn’t flashy, but it’s existential…

Identify vulnerabilities, coordinate domestic capacity, accelerate permitting and production, and align private companies with national defense priorities long before a crisis hits.

This isn’t about hypothetical future wars. It’s about readiness — today.

Why Membership Is a Strategic Asset, not a Press Release

For companies inside the Consortium’s orbit, participation is far more than symbolic…

It acts as a signal flare to Washington, the Pentagon, and capital markets that a company is strategically relevant.

Membership opens doors to federal coordination, long-term procurement visibility, and policy alignment that non-members simply don’t get.

It also places companies inside the conversation when rules are written around permitting reform, domestic sourcing mandates, stockpiling programs, and defense funding priorities.

In plain English, Consortium-aligned companies stop being “just another miner” or manufacturer. They become infrastructure.

That distinction matters when governments are deciding who gets funding, who gets fast-tracked, and who becomes indispensable.

And that brings us to a new and very important development: mining companies are now stepping into the defense spotlight.

Apollo Silver Corp: Silver as a Strategic Metal Again

One of the more interesting names to emerge in this shift is Apollo Silver Corp. (APGO:TSX.V; APGOF:OTCQB).

Silver rarely gets framed as a defense metal in popular discourse, but it absolutely should.

It is critical to advanced electronics, missile guidance systems, secure communications, solar-powered defense infrastructure, and a growing range of aerospace and energy applications.

Modern warfare is digital, electrified, and sensor-dense — and silver sits at the center of that reality.

Apollo Silver’s alignment with the Defense Industrial Base Consortium reflects a broader recognition that precious metals are no longer just financial hedges or industrial afterthoughts.

They’re strategic inputs.

Domestic silver supply, especially from stable U.S. jurisdictions, reduces exposure to foreign bottlenecks at a time when defense systems are becoming more metal-intensive, not less.

This is silver growing up. And investors who still think of it as a shiny relic are missing the plot.

MP Materials: Rare Earths, Real Power

If Apollo Silver represents the rediscovery of an old strategic metal, MP Materials Corp. (MP:NYSE) represents the hard lesson of losing an entire supply chain.

Rare earth elements are essential to fighter jets, precision-guided munitions, radar systems, drones, and electric propulsion.

For years, the U.S. outsourced this capability almost entirely. The result was a near-total dependence on China for materials that underpin modern warfare.

While it’s yet to become an official member, MP Materials and its government investment reflects a national effort to reverse that mistake.

By rebuilding domestic mining, processing, and magnet production capacity, MP isn’t just supplying materials — it’s restoring strategic autonomy.

This is what “onshoring” looks like when it actually matters. Not slogans. Capacity.

Energy Fuels: Nuclear Security Starts at the Mine

The third pillar in this emerging defense-miner alignment is Energy Fuels Inc. (EFR:TSX; UUUU:NYSE.American).

Nuclear energy sits at a strange intersection of civilian infrastructure and national defense.

Uranium fuels power grids, but it also underpins naval propulsion, deterrence credibility, and long-term strategic stability.

A nation that cannot secure its nuclear fuel cycle cannot fully secure its defense posture.

Energy Fuels’ participation in Defense Industrial Base initiatives reflects a recognition that uranium independence is not optional. It is foundational…

From fueling reactors to supporting advanced nuclear technologies, domestic uranium production is a national security imperative hiding in plain sight.

This is less about profits next quarter and more about sovereignty next decade.

The Bigger Picture Most Investors Are Missing

Here’s the part the market is still slow to price in…

The Defense Industrial Base Consortium represents a structural shift in how America thinks about industry.

Efficiency is no longer king. Resilience is. Redundancy is. Domestic capacity is.

That shift doesn’t happen overnight, but once it starts, it doesn’t reverse easily…

Defense supply chains are sticky. Relationships last decades. Contracts roll forward. Strategic suppliers become embedded.

For investors, that means something profound…

Companies aligned with national defense priorities often enjoy longer runways, stronger political tailwinds, and a margin of safety that purely commercial players don’t.

Apollo Silver, MP Materials, and Energy Fuels aren’t just operating in hot commodity markets. They’re operating in markets that Washington has decided it cannot afford to lose.

And historically, when that happens, capital follows policy.

This Isn’t a Trade—It’s a Theme

Let’s call this what it is…

The Defense Industrial Base is being rebuilt in real time, under pressure, with urgency. The Consortium is the connective tissue making that rebuild possible.

Mining companies inside this orbit are no longer background players. They are strategic assets.

The smartest investors won’t wait until everyone else starts calling these companies “defense stocks.”

By then, the easy money is gone.