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My fellow AI explorers

This past week, the Pope published a 42,000-word document about artificial intelligence. An Anthropic co-founder stood next to him at the Vatican. Big Tech got accused of running a giant money recycling loop dressed up as AI revenue. And did you get a chance to say goodbye to the Google search bar? Google just quietly totally killed and reworked the internet search process.

In today’s edition:

• ⛪ Pope Leo's bombshell encyclical on AI, and why Anthropic was at the Vatican

• 📉 The AI bubble theory that has Wall Street quietly sweating

Google AI

⛪ Pope Leo XIV vs. The AI Industry: The Vatican Just Entered the Chat

The Catholic Church just published the most unexpected AI policy document of 2026, and it landed harder than most think pieces from Silicon Valley.

On May 25, Pope Leo XIV released his first encyclical, a 245-paragraph, 42,000-word document titled Magnifica Humanitas ("Magnificent Humanity"), dedicated entirely to artificial intelligence. Standing alongside him at the Vatican's Synod Hall was Christopher Olah, co-founder of Anthropic.

Here's what the document demands:

• AI data should be classified as a common good, not private property

• Governments must slow down AI development and regulate it robustly

• AI must never be used as a tool of warfare: "No algorithm can make war morally acceptable"

• Workers must be protected from mass job displacement at scale

The kicker? Olah used the occasion to say openly what most AI executives avoid entirely. He told the audience there is a "real possibility" that AI displaces human labour "at very large scale" and that supporting those displaced would be a moral imperative of historic proportions.

That's not a PR statement. That's an AI billionaire standing in the Vatican telling the world the technology he is building might break the economy for millions of people.

The Pope framed it without softening it: "Artificial Intelligence now demands to be disarmed, freed from logics that turn it into an instrument of domination, exclusion and death."

Why this matters more than the headline: Leo signed this document on May 15, the 135th anniversary of Rerum Novarum, the 1891 encyclical on labor rights that became the foundation of modern Catholic social teaching. That timing was completely deliberate. He's drawing a direct line between the Industrial Revolution and what AI is about to do to work. Experts across tech and academia are already calling Magnifica Humanitas a benchmark in AI policy debates globally.

🔮 Prediction: This encyclical gives moderate politicians in the EU, Latin America, and the developing world the moral cover to push harder on AI regulation. Expect it to be cited in legislative hearings over the next 12 months. The Vatican just joined the AI governance conversation, and it came prepared.

Read the full coverage here →

Fake AI

📉 Is the AI Boom Built on Fake Revenue? The Cloud Loop Nobody Wants to Discuss

Critics are pointing to a structural flaw at the heart of the $2 trillion AI gold rush, and the math is hard to ignore.

Here's the mechanism, stripped down: A Big Tech giant invests billions into an AI startup. That same contract then requires the money to flow right back as cloud rent. The cash never really leaves the ecosystem. Critics are calling it a round-trip funding loop, and the numbers are starting to raise eyebrows at scale.

Here's how the pattern runs:

• Microsoft's $13 billion investment in OpenAI arrived largely as Azure cloud credits, which OpenAI spent on training, which Microsoft booked as commercial revenue

• Anthropic spent $2.66 billion on Amazon Web Services in nine months, roughly every dollar it earned

• OpenAI's annual cloud bill has reportedly ballooned past $60 billion. Its actual revenue sits closer to $25 billion

The paper profits are doing heavy lifting, too. Alphabet posted a record $62.6 billion profit in Q1 2026, with roughly $28.7 billion of that figure coming from a markup on its Anthropic stake. Amazon's story looked similar, with a huge chunk of its $30.3 billion net income tracing back to the same valuation story. Behind the headline number, Amazon's free cash flow dropped 95% to $1.2 billion.

Real companies hitting the wall: Uber burned through its full 2026 AI coding budget by April. Microsoft told its own employees to stop using Claude Code internally after token costs became unsustainable. Nvidia's VP of applied deep learning told Axios his team now spends more on compute than on human salaries.

The question critics are asking: does this rhyme with the dot-com era? Global Crossing and Qwest swapped fiber capacity to fabricate sales in 2001, before Qwest erased $1.4 billion in fictitious income and Global Crossing went bankrupt. The 2026 version is fully legal under current accounting rules. But the structure is uncomfortably similar.

🔮 Prediction: The AI industry is entering its "prove-it phase." The market is no longer asking whether AI can grow. It's asking whether AI can pay for itself. The first major enterprise that publicly reports a negative ROI on AI spending will trigger a conversation that no amount of paper profits can quiet.

Read the full breakdown here →

30-Second AI Play

💡 How to Build Your Own AI-Powered Search Agent Using Google's New Search Tools

Google just quietly gave everyone access to something that used to require a developer: a personal search agent that monitors the web for you, 24/7, without being asked. Here's how to use it today.

1. Open Google Search and look for the expanded search box rolling out globally. You'll notice the field is bigger and accepts longer, conversational queries.

2. Type a detailed, multi-part query the way you'd speak, not just keywords. Example: "Track new research papers on AI regulation published in Europe this week and summarize the key arguments."

3. Enable AI Mode when prompted in the search interface.

4. Click "Create Agent" and set your topic. This sets up a persistent tracker that monitors the web and pushes updates when something changes, without you asking again.

5. Check your Gemini section for the new "Spark" agent, which runs in the background even when your device is locked, watching email inboxes, documents, and connected apps.

🔍 Why it's powerful: This isn't just a better search bar. Google is calling it the biggest upgrade to Search in over 25 years. For professionals, it means you can delegate web monitoring entirely to an AI agent. The Information Agents feature arriving this summer for AI Pro and Ultra subscribers takes it even further.

💡 Pro tip: Use the agent to track competitor product launches, regulatory changes in your industry, or keyword mentions across news sources. It's free market intelligence that used to cost thousands a month through enterprise tools.

Other Relevant AI News!

🔍 Google just made the biggest change to its search bar in 25 years, replacing the classic list of blue links with an AI-powered conversational search box running on Gemini 3.5 Flash that accepts text, images, video, and files, while deploying persistent background agents that monitor the web on your behalf 24/7.

🏭 Meta is now tracking employee keystrokes and mouse clicks to train its own AI agents, as CTO Andrew Bosworth leads a company-wide overhaul that laid off 8,000 workers and shifted 7,000 more into AI roles, with $135 billion committed to becoming what Zuckerberg calls an "AI-native" company.

🧒 Iowa just became the first US state to require AI chatbots to remind children every 3 hours that they're not human, passing a law unanimously through both chambers that also bans AI from generating explicit content for minors and mandates crisis referrals for kids showing signs of self-harm.

⚠️ Fidelity's own AI bubble framework is now flagging warning signs, with Big Tech's Q1 filings already tripping two of its five indicators: earnings quality and capex affordability, raising the uncomfortable question of whether the boom can survive contact with actual enterprise budgets.

Golden Nuggets

• ⛪ The Pope's first encyclical is dedicated entirely to AI, and it will be cited in policy debates for years. The Vatican just became an AI governance stakeholder, whether Silicon Valley likes it or not.

• 💸 When Alphabet's record quarterly profits lean heavily on paper gains from Anthropic markups, and Amazon's free cash flow drops 95% in the same period, the "prove it" moment for AI economics is getting very close.

• 🔍 Google's new search is a fundamental bet against its own business model. Whoever figures out how to monetize AI conversations wins the next decade of the internet.

Would love to hear your thoughts! Send me your thoughts by replying to this email (yes, I read them all :)

Until our next AI rendezvous,

Anthony | Founder of Uncover AI