The revered Pablo Picasso once said that every act of creation begins with an act of destruction. And believe it or not, I think that quote perfectly encapsulates the AI Revolution…
Because while there is a lot of sensationalism surrounding AI right now, there is also a lot of fear about its potential negative impact.
Big Tech companies are spending hundreds of billions of dollars per year to develop advanced AI applications in hopes of transforming the world, fundamentally changing how we work, play, travel, shop, communicate, etc.
But if these models are that good… will they soon be better at our jobs than you and me? Does the creation of AI mean the destruction of jobs?
I think the answer, unfortunately, could be a resounding yes.
After all, artificial intelligence can already code, market, and design. It can do taxes, find restaurants and travel destinations, write scripts and ads. It can provide customer service, create learning programs – even pick stocks.
Sure, AI isn’t as good as most of us at our jobs… yet. But inevitably, it will get there.
Just think about how far the technology has advanced in the past two years.
The AI Industry’s Exponential Progress
When OpenAI launched ChatGPT in late 2022, the early model – GPT-3 – was cool. But it wasn’t very good. It made errors all the time. Not many really relied on it to do anything of significance. The firm’s own CTO said ChatGPT-3 had mere toddler-level intelligence.
But current versions – the o3 and Deep Reasoning models – are highly capable of completing complex tasks, like coding assignments and legal briefs. Some claim these new AI models have PhD-level intelligence.
In other words, AI has progressed from toddler-level to PhD-level intelligence over just the past two years.
Where will we go in the next two years?
I’ll tell you where – to a point where AI can not only do our jobs, but do them much better than most of us.
And of course, I’m not alone in thinking that.
Goldman Sachs (GS) estimates that AI could replace 300 million full-time jobs. McKinsey Global anticipates that around 15% of workers globally will have to change careers due to AI. OpenAI’s own research suggests that about 20% of workers may be at risk of AI-powered automation. Citi sees AI impacting more than half of all jobs in finance. And according to a recent Conference Board survey, about 50% of CEOs themselves think they’ll eventually replace human labor with AI.
Make no mistake about it. AI is coming for your job.
And this will probably happen much sooner than we think.
This Jobs Apocalypse Has Already Begun
It seems that the consensus belief among everyday Americans is that the whole ‘AI Jobs Apocalypse’ is way overblown; that even if it does happen, it’s still another 10 or 20 years away.
But we are seeing evidence that suggests this labor destruction has already begun.
Just last week, for example, major marketing tech firm Salesforce (CRM) announced it was laying off over 1,000 workers to sell more AI products and services.
And this is merely the tip of the iceberg.
Meta (META) is laying off about 5% of its workforce. CEO Mark Zuckerberg is publicly claiming that this will be the year the world develops “an AI engineering agent that has coding and problem-solving abilities of around a good mid-level engineer.”
Microsoft (MSFT) is reportedly laying off low-performance workers, too. So is Amazon (AMZN). And both companies expect to spend nearly $100 billion each on AI infrastructure this year.
Meanwhile, Workday (WDAY) just made known that it is laying off nearly 10% of its workforce as part of a strategic shift to invest more heavily in AI. Intel (INTC) is enforcing huge layoffs, too, amounting to about 15% of its workforce, as it shifts to enhance its AI capabilities. Dell (DELL) is undergoing a similar reallocation toward AI investments, laying off more than 10,000 people in the process.
Last year, Best Buy (BBY) announced widespread layoffs, including cuts to the company’s Geek Squad and customer service specialists. At the same time, the electronics retailer announced a new venture with Google Cloud to use generative AI technology for tech support.
Language-learning company Duolingo (DUOL) used to rely on an army of contractors to help support its mobile application. Typically, those contractors created sentences for courses, produced lists of acceptable translations, and reviewed user error reports to correct mistakes. But last year, Duolingo announced it was laying off 10% of those contractors and relying on AI to do all of that stuff instead.
Klarna, Advanced Micro Devices (AMD), Cisco (CSCO), Activision Blizzard (ATVI), Intuit (INTU), and others are also a part of a long and growing list of companies laying off employees for purposes related to AI.
Folks, the writing is on the wall. A ton of Americans are already losing their jobs because of AI.
And this trend is likely to only continue.
Using AI to Boost Productivity and Profits
A recent survey of CFOs conducted by Duke University and the Federal Reserve Banks of Atlanta and Richmond found that 61% of U.S. firms plan to use AI within the next year to automate tasks previously done by employees.
They are doing so to increase product quality (according to 58% of firms surveyed), increase output (49%), reduce labor costs (47%), and replace workers (33%).
In other words, companies are turning to artificial intelligence to boost profits.
And it is working.
Across the S&P 500 this quarter, companies reported over 10% earnings growth, on average. That is one of the best earnings growth rates the S&P has reported since the COVID-19 pandemic hit five years ago.
At the same time, unemployment is rising sharply. Back in summer of 2022, only 1.3 million Americans were filing for unemployment claims. Nearly 2 million Americans are filing today.
So… right now… unemployment is rising… yet corporate profits are also soaring.
That’s unusual. And it tells me that companies are replacing human labor with AI to boost productivity and profits.
The AI Jobs Apocalypse has arrived.
Are you at risk?
Maybe. And that means you must prepare for what’s ahead.
We think the best way to do so is by buying AI stocks.
The Final Word on Surviving the AI Jobs Apocalypse
The companies that figure out how to use AI to boost revenues and cut costs will drive strong earnings growth. As a result, their stocks will soar.
And the rest of the world will get left behind.
We’re already seeing this play out.
Since September 2022, average hourly earnings for the American worker have risen 10%. Consumer prices – or inflation – have risen 7%. So, on a real basis, real American wages are up just 3% since late 2022. That means wages are barely keeping up with the cost of living.
But AI stocks are a completely different story. They are broadly up 120% since September 2022 – clearly crushing inflation!
As the AI Jobs Apocalypse proliferates across the global economy, the divide between wage growth and AI stock growth will only get increasingly wider.
The choice before us, then, is simple.
Stay on the sidelines. Keep collecting your paycheck. And barely get by as the cost of living keeps going up.
Or get in the game. Invest in AI stocks. And create real wealth through the biggest technological megatrend since the internet.
I know the weight of this risk can feel immobilizing. So many folks in my life – myself included – worry that one day soon, they could struggle to put food on the table.
And while there may only be so much we can do to prepare, I want to do my best to equip as many people as possible for what could lie ahead.
That’s why I’ve put together a brand-new presentation on the AI Jobs Apocalypse, detailing what it means for the economy, the markets, and maybe even your money.
In some ways, it’s like a survival guide for a new AI-powered world – a Ted Talk of sorts – jam-packed with a ton of information that I think you’ll find very valuable in this new “Age of AI.”
Check out that new video right now.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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