AI Is Coming for Business - But Evidence of Real Impact Remains 'Ambiguous'

AI Is Coming for Business - But Evidence of Real Impact Remains 'Ambiguous'

A viral essay declaring that AI is coming for coding jobs - and then everything else - was viewed 80 million times this week. Wealth management stocks sank on fears of automated advice. Tech giants are spending $660 billion on AI infrastructure. Yet researchers studying the actual impact on jobs say the evidence so far is, at best, unclear.

The Market Panic

The release of ever more powerful AI tools has coincided with a stock market slide that has swept up sectors as diverse as drug distribution, commercial property, and price comparison sites. Advances in technology are giving increasing credence to predictions that AI could render millions of white-collar jobs obsolete - or at least eat into the profits of established companies.

The panic was amplified by a viral essay from AI entrepreneur Matt Shumer titled "Something big is happening," claiming new models will come for coding jobs and then "everything else," comparing the present moment to February just before the Covid pandemic. The post triggered fear and fury - though critics pointed out Shumer has a history of AI hype, including announcing a "world's top open-source model" that was later questioned.

Investors are reassessing the value of companies that rely heavily on selling software or specialist knowledge. Carl Benedikt Frey, associate professor of AI and work at the University of Oxford, says: "AI turns once-scarce expertise into output that's cheaper, faster, and increasingly comparable, which compresses margins long before whole jobs disappear."

The Reality Check

But not everyone is convinced the sky is falling. Greg Thwaites, research director at the UK thinktank the Resolution Foundation and associate professor at the University of Nottingham, says evidence of a tangible AI jobs impact on large Western economies is "quite ambiguous so far."

"There are some jobs that are going to look different quite quickly," Thwaites said. "But the idea that there are going to be bands of unemployed lawyers and accountants roaming around London within a few years seems like a stretch to me."

Alvin Nguyen, an analyst at Forrester, says the fears that shook the stock market are based on sentiment, not evidence: no one has had time to evaluate the performance of the latest AI models in real business settings.

"It's a kneejerk reaction," Nguyen said. "How true is it? Look, there's plenty of leaders out there who thought, I can replace people with AI at the beginning. And a lot of people acted on that. And I think one of the things that's being found out is that for a lot of cases, no, it hasn't panned out."

The Spending Question

The AI "hyperscalers" - the big US tech players - collectively plan to spend $660 billion this year. Yet none of the AI model-builders have a clear path to the enormous revenue that would justify this spend. The revenue from the entire global software sector this year is projected to be just $780 billion.

Meanwhile, cracks have appeared in these numbers. Nvidia and OpenAI recently appeared to drop a $100 billion deal, replacing it with a smaller, as-yet-unknown commitment.

What This Means

History shows a repeated pattern of significant lag between a technology working in a lab and permeating the wider economy, says Aaron Rosenberg, a partner at Radical Ventures and former head of strategy at Google's AI unit DeepMind.

The two themes - AI hype and actual impact - are inherently linked but not necessarily contradictory. For now, the market is reacting to sentiment and fear rather than hard data. The real question - whether AI will genuinely transform white-collar work or prove overhyped - remains unanswered.

Sources:

• •The Guardian - AI is indeed coming but there is also evidence to allay investor fears
• •Harvard Business Review - AI Doesn't Reduce Work—It Intensifies It