Davos 2026 and the end of the rules-based order

0:00Azeem Azhar:Welcome back to Exponential View. I'm Azeem Azhar and this is a special episode. A collection of live dispatches I recorded on the ground at Davos 2026. Over four days at the World Economic Forum's annual meeting, I brought you into the corridors, the queues and the conversations as they happened. From the unprecedented buzz around Donald Trump's arrival, Mark Carney's stirring call for sovereignty and the practical realities of AI adoption in enterprise. This is Davos as I experienced it.

0:37Azeem Azhar:On day one, I had just arrived at the Congress Centre. The big story everyone was talking about was, of course, Trump. He would be speaking in a couple of days and the geopolitical tension was palpable. But to begin with, my focus was tracking three things. The state of AI and its move into enterprise, the startup ecosystem and the energy transition. Welcome, everyone. It's Azim here, and I'm in Davos for the annual meeting of the World Economic Forum. This is day one of some very brief Substack Live reports I will give. Donald Trump is going to be here. He's going to be speaking on Wednesday.

1:15It is a momentous moment, I think, given all of the tensions in the world today. The geopolitics of it, shall we say, is a little bit frenetic and frantic. We have had, of course, Venezuela, but now the Greenland issue and the frictions between the US and European nations, many of whose leaders are going to be here. Macron speaking as well this week. So that is perhaps part of the overarching mood. It's meant that there are more political leaders than usual here. Of course, the other thing that is going on and the other major question is our world, is artificial intelligence. And again, this year, lots of the top bosses from the AI firms are in town, lots of philanthropic Wapik, from Cohere, from you.com.

1:55I've already seen a number of them so far today and many of the key investors who are involved. So what am I looking out for? I've got a pretty busy schedule of meetings and conversations. Probably best to put them into three categories. One category is really all about what's happening with AI, with AI in the future of work, in its deployment in the enterprise, how the foundation model companies are evolving and developing. We expect to see two IPOs this year from Anthropic and from OpenAI, if the rumors are true. The second thing that I will be spending a lot of time on is working with some of the fantastic startups that show up here to try to understand what's going on in startup development growth funding.

2:38And it's a great chance for me to talk to some of the fastest growing companies in deep tech, the founders who generally make their way here. And the final part that I will be spending time on will be around the energy stack and the energy nexus. So what happens with the energy demands of AI? What happens with our decarbonization? More importantly, what happens with the growth of renewables and how the grids transition? One of the things about the World Economic Forum's annual meeting is that it brings together the people who actually have to deliver all of this in reality. And they work at a different clock speed to people who are perhaps reading Exponential View, where we look at this long-term trend and we can see the direction, which is it is a solar-powered grid supported by certain types of other clean power and batteries.

3:24They are the ones who are sitting on today's mostly fossil grids having to figure out how to go from A to Z. So those are the three things that I am spending time on so far. It's hard to pick up the mood right now. Last year, certainly, the mood was very negative on Europe in those first couple of days. So far today, there's just been a lot of running around. It's not particularly cold. There is, of course, as we know, this huge USA house that is occupying quite a lot of space in this church. And I will be very intrigued to see how that all plays out over the next couple of days.

3:55Azeem Azhar:This was day three, and it was a momentous one. Donald Trump's plane had just landed in Zurich, and the queue to see him speak stretched further than I'd ever seen at any Davos session. But before we got to that, I wanted to talk about sovereignty. Mark Carney and several European leaders had made it clear The rules-based order as we knew it was over. It is quite a momentous moment. Of course, Donald J. Trump, having had his plane delayed, has now landed in Zurich and is likely on his way in a helicopter to Davos to speak. And so that is going to be the topic of my live today. I may come back in the afternoon once he's had a chance to speak.

4:37Let me give you a sense of what is going on right now. Trump will be speaking at the main Congress Centre. And in just over an hour, 2.30 local time, 3.30 if you're in the UK, normally you just start to queue up a minute or two before you want to get into a session. Even for Jensen Huang, who I saw speak a few minutes ago, I arrived 30 seconds before Jensen got on stage. We're over an hour, nearly an hour and a half before Trump arrives. So I've taken one for the team. I won't be able to see this live because I was either going to be out here or I was going to be in there watching. So I'm not on the queue.

5:09I'm here talking to you. And here we go. Sovereignty. I urge you to go back and read Mark Carney's speech. The Prime Minister of Canada gave speech yesterday. He, in the words of Michael Caine in the Italian job, he blew bloody doors off. It's a fantastic speech about what sovereignty needs to look like if you're a middle power, about the kind of alliances you're going to have to build. But critically, the point he makes is the rules-based order is over. It's not a smooth transition. It is a rupture and people need to live up to it. But let's just say I see Juri Van Hees saying he's a real leader.

5:43Juri, of course, the Belgian prime minister also did himself proud. Speaking a little bit before Carney yesterday, his words were, and please, I'm going to be paraphrasing, Europe has been a group of happy vassals and now runs a risk of being unwilling slaves. It was incredibly powerful language, which adds, I think, to the momentousness of the moment right now. Arthur Mench of Mistral was also on that panel, and Arthur made the observation that technological sovereignty is going to be really important, that the entirety of Europe is dependent essentially on US software. I've talked to a lot of people, and I think people in the Exponential View community, how we have thought about the world being spiky.

6:25We put this risk in the first book, which came out five years ago. And essentially, there is a widening belief that interdependency is now going to be weaponized extensively. that even things, my view now, like the Microsoft Sovereign Cloud are merely pabulum because Microsoft is still jurisdictioned in the US, would have to adhere to any kind of court order relating to data access, services access, or even just turning off that cloud. And so I think the fundamental notion that sovereignty is now really right up the agenda and not a kind of vibes-based sovereignty, but a real sovereignty where the interdependencies are managed, the risks are mitigated.

7:04It's easy, frankly, at the model level to do that because of open source and other things. It's easy at the application level. Funnily enough, it's probably manageable at the cloud level if you're prepared to move from the major high upscalers. But the chips remain a problem, not this year, but maybe next year or the year after that or the year after that. The way that I think that this would end up playing out is that if you are a major cloud provider like an AWS or a Google, you will use your influence in Washington to slow down the most harmful possible routes to open partnership-based approach.

7:39But at the same time, I think if you're a European nation, you really need to start to think quite seriously about what your options and alternatives are. In a way, it feels fairly momentous. So this discussion, the way that I think about this is that even if there are logical ruptures, as Carney identified, there's adjustment times, There are conversations. There are things that happen behind closed doors. You have still the interests of American businesses to the constituencies in the U.S. Someone like Howard Lutnick, of course, going to fight the corner of the U.S. business. But you are also going to see the application of certain classes of new approaches.

8:17We've reported in Reuters today that the Danes were selling down some of their holdings of U.S. treasuries. So who knows what will happen. I have this morning been in a number of sessions just around AI and AI deployments, really seeing what's happening there, which of course is progressing with a different pace, but is also very disruptive given, again, the doubling of AI capabilities every six or seven months and the challenge there is for organizations to adopt those. Needless to say, it's a very full program right now. We are one hour and 13 minutes away from the president of the US. We'll speak, He has left an ominous note.

8:56We'll find out. You can never tell because he is a showman. He is a dealmaker. He will exercise his judgment. But the Europeans and the Canadians in the last 24 hours have certainly been showing some metal. All fortunately, Eric Brynjolfsson and I have a discussion on AI and organizations and how they're going to be coping and what the early data is telling us that is happening at the same time as the Trump speech or around the same sort of time. So I won't be able to be there, but I will speak to people and no doubt get a sense of what he said and what the mood is afterwards.

9:31Azeem Azhar:It was Thursday and my last day of live reports. Shortly before Elon Musk was scheduled to speak, I recorded another live session to pull together the threads from the week. Two themes had dominated, the awakening to real geopolitical fragmentation and the practical reality of AI adoption in organisations. I'd also spent time with some brilliant startup founders and there was a lot of reason for optimism. Awesome. I'm just standing outside the artwork of the Congress this year, which is a generative landscape. Elon Musk will be speaking in about 15 minutes. There is a queue forming. He'll be talking to Larry Fink from BlackRock, who's the co-chair at the moment of the World Economic Forum.

10:14Let me talk about what has really come across as the two things that are dominating discussion here. Actually, they are the same two themes that have emerged in the last couple of updates. The first is the geoeconomics, geopolitical fragmentation, that we are seeing a sense that this is more real, more live, more tangible, more practical than perhaps we had experienced in previous years. We know about Ron Carney's speech, we know about Donald Trump and his two-hour and some ramble. Most people who sat through that did say they lost the thread of what the argument was or the point that was being made was.

10:52But I think more interestingly in conversations I've had with people from the international relations and geopolitics community and some business leaders who are running multinational organizations is the awakening of the complexity of this environment. And that in a sense, as someone challenged me yesterday after I had said there are only two countries who can really be sovereign in the world, which would be, of course, the United States and China, the pushback came. The pushback was that yet is that even true? Of course, the US is dependent on lots of things China produces. It's dependent on ASML, which is a European company for making the advanced machines that make the chicks.

11:30So we do still have this quite interrelated and connected world despite a move towards mechanicalist policies. But what's really different this year, because we've been talking about these things for a couple of years, and I co-led a working group looking at this two years back, is it feels more real. It feels more real, more tangible. Steps are being taken right now. Now, other thing I observe, of course, is that we tend to, especially coming out of the UK, as I am, to think about this in terms of the transatlantic relationship. But somebody pointed out to me, of course, that US trade is actually only a small portion of global trade and outside of the US.

12:04In fact, from the US trade is growing, but outside of the US, it is growing even more rapidly because many countries do need to continue to trade with each other. So the picture is not quite as black and white as we otherwise would have seen. The second theme that is playing its way out and becoming really consistent are questions about AI. And let me just summarize where they are. They are at the point of what will the impacts be within organizations and what will the impacts be on work, on employment and on education. So really practical, tangible questions. Whereas two or three years ago, the world, you remember that absolutely crazy and absurd safety summit held in the UK's Bletchley Park a couple of years ago.

12:41the world was obsessing about robots climbing out of data centers and murdering us. We've moved past those science fiction and fantasy discussions into more practical conversations. The thing that has come out, though, is what a mixed bag of experiences firms have had. I think it is clear that adoption remains in that early stage. And when I talk to bosses, I'm not getting messages that say, we're all kicking off with this. It's all doing super, super well. What I'm getting is we're still learning. We're still figuring it out. We're still rolling it out. Now, that is absolutely consistent with the view that Exponential View has had, which is that we're still early into all of this.

13:14And we should only be looking at low 5, 7, 8, 9 % of companies really claiming that they've got good success right now. But that number should really rise over the coming nine months to a year. And we have to keep our eye on it. But in amongst that have been a couple of really big companies, household names. I can't just share them because it's been shared with me confidentially who have built some really impressive AI tooling for some of their core functions. the real things they do, not just something that's over at the edge like data processing, but the heartland of their business units activity.

13:44And that I think is really heartening to see if you believe as we do that AI will improve business performance and improve how well companies could serve their customers. Final takeaway on all of this is I was really lucky to spend a couple of hours with about a dozen startup founders and a couple of really amazing investors, venture investors yesterday. And I was really impressed with some of the things that came out of that. I'll just pick up one. It's a company called Hippocratic AI. They are making AI-based tools to broaden access to nurse-oriented healthcare in the US. Essentially, they have agents that can make phone calls and provide the kind of telecare that a trained nurse can.

14:21And I'm going to dig more deeply into what they do, but a really impressive presentation in terms of the efficacy and cost of delivering healthcare that way. One very interesting takeaway from the CEO of Hippocratic was that all of their models, their AI models, were open source models so that they could maintain the control and manage the costs. In fact, ultimately the gross margin of using those models rather than the so-sourced paid-for models. I had a fantastic sense that this particular AI debate as the reality dawns that we're only a couple of miles away from that hill has turned into one that is about how do you get over that hill, get across that hill, as opposed to fundamentally veering that hill.

15:01Anyway, just to give my sort of net reflections, much more practical. I've heard very little about other topics. There's not been much of a sustainability discussion happen across my track, but there could be loads going on that I don't see because it is such a rich event. But definitely the two things that have stood out generically, generally within the Congress Centre, but also in my dinners and walking around and just chatting to people and listening to them and learning from them has been the awakening of the socioeconomic, the sovereignty question on the one hand, on the second, the practical questions as they relate to AI as it makes its way into the workplace.

15:36Azeem Azhar:That's a wrap on my Davos dispatches. The two dominant themes that emerged from this week were clear. The first, that the rules-based world order is now fracturing in real time, with a growing sense that old geopolitical and economic assumptions no longer hold. And the second, somewhat understated theme was AI's role in through of this, how it's quietly becoming operational in ways that really matter. Thanks for joining me on the ground. See you next time. Thanks for listening all the way to the end. If you want to know when the next conversation is released, just hit subscribe wherever you're listening.

16:12That's all for now, and I'll catch you next time.

16:21Thank you.