The message from investors this month for the software, wealth management, legal services and logistics industries is clear: AI is coming for your business.
The release of new, even more powerful AI tools has coincided with the stock market crash, which has affected sectors as diverse as drug delivery, commercial property and price comparison sites. Advances in technology are adding increasing credence to predictions that it could render millions of white-collar jobs obsolete – or, at least, put a dent in the profits of established companies.
Carl Benedict Frey, author of How Progress Ends and an associate professor of AI who works at the University of Oxford, says investors are reevaluating the value of companies that rely heavily on selling software or expert knowledge.
“AI transforms once-scarce expertise into output that is cheaper, faster, and increasingly comparable, squeezing margins long before entire jobs disappear.”
There was fear of mass job loss It was boosted by a viral essay this weekWritten by AI entrepreneur Matt Schumer, titled: Something big is happening. In it, Schumer intends to explain to the world outside Silicon Valley that new models will come for coding jobs and then for “everything else”, comparing the current moment to February, just before the Covid pandemic.
The post was viewed 80 million times on Twitter, sparking fear and outrage – including people pointing out that Schumer has a history of AI promotion. (He previously excited the Internet announcement of Release of the world’s “top open-source model”, which it was No.)
Schumer and the market were reacting to the capabilities of recently released models such as Anthropic’s Cloud Opus 4.6 and OpenAI’s GPT-5.3-codecs, both of which were improvements over previous, powerful AI products.
But there are other reasons for the horror of these times, at least the companies that are manufacturing these models. AI “hyperscalers” – the term for big US tech players in the field – plan to collectively spend $660 billion (£484 billion) this year. It follows a year of huge, often circular deals between the world’s biggest tech companies.
However, cracks have appeared in these numbers, with questions raised about what they actually mean. Nvidia and OpenAI recently canceled the $100 billion deal and replaced it with an undisclosed, smaller commitment.
Meanwhile, none of the AI model-makers – not OpenAI, XAI or Anthropic – have a clear path to huge revenues that would justify this expense; Revenue from the entire global software sector is estimated to be only $780 billion this year.
This week it emerged that both arguments about AI – whether it is an unsustainable boom or heralding a destructive revolution in white-collar work – have been entertained by some investors, with shares of Google’s parent company, Alphabet, and Mark Zuckerberg’s Meta being hit by apparent concerns about a spending bubble.
Clearly, investors expect these companies to recoup their investments through the multitude of individuals and businesses paying for their equipment, as they allow certain tasks and jobs to be completed by fewer people or in fewer hours. Or in economic jargon, a productivity boom.
“The two topics are inherently linked but not necessarily contradictory,” says Jason Borbora-Sheen, portfolio manager at investment management firm Ninety One.
First, investors supported the spending by “hyperscalers” in the early stages of the AI gold rush. Borbora-Sheen says those concerns have now extended to the cash drain and massive investments required to remain competitive, while at the same time the share prices of money managers and others have been hit by the perception that AI is “here now, will evolve and may be displaced”.
Companies have cited AI as an influence on job-cut plans, including British American Tobacco this week, but there has been no wave of wholesale disruption yet. Greg Thwaites, research director at the UK thinktank Resolution Foundation and associate professor at the University of Nottingham, says the evidence for a concrete impact of AI jobs on large Western economies is “so far quite vague”.
He says not all white-collar jobs will be affected, although AI could test theories around the age-old capitalist concept of “creative destruction,” which involves entirely new jobs replacing old ones, such as farriers being replaced by car mechanics. Will AI be a different matter because change has come so fast or because it will be good at absolutely everything?
He adds: “There are some jobs that are going to look very different very soon. But the idea that within a few years there will be hordes of unemployed lawyers and accountants roaming around London seems like a stretch to me.”
Alvin Nguyen, an analyst at Forrester, says the fears roiling the stock market are based on emotions, not evidence: No one has time to evaluate the performance of an Opus 4.6-powered money manager.
“It’s a knee-jerk reaction,” he said. “How true is that? Look, there were a lot of leaders who thought I could replace people with AI early on. And a lot of people worked on it. And I think one of the things we’re finding is that in many cases, no, it hasn’t worked.”
Aaron Rosenberg, partner at venture capital firm Radical Ventures – whose investments include leading AI firm Foghere – and former head of strategy and operations at Google’s AI unit DeepMind, says the impact of AI in the long term is being underestimated, but adoption of groundbreaking models won’t be uniform.
He says, “History repeats the pattern that there is a significant lag between a technology working in a laboratory and its entry into the broader economy, as well as a gap between early adopters and the majority of users.”
More new models will be coming; Other big AI deals could also falter. Meanwhile, there were low-level rumblings of discontent from high-profile tech workers this month; AI companies continue to depart for various reasons boredomConcern over AI apocalypse and the possibility of adult content in ChatGPT.
There’s a nervous, unfocused energy going on. As Borbora-Sheen says: “There’s a strong dynamic of winner versus loser.”
