Artificial Intelligence (AI) is the latest buzz word in the financial market. Companies make sure to
mention their AI efforts in conference calls. It seems like the more a company is involved in AI, the
higher their stock price is rising these days. Is all of this hype creating a bubble?
There is some froth in AI stocks, but it is far short of bubble territory. In fact, the poster child for
AI, Nvidia, is actually cheaper to buy today because of the huge demand for their AI chips. They do
not have enough capacity to satisfy current demand.
The demand has been created by the increased functions and features of “Large Language Models”
(LLMs) that analyze human created content so that they can perform human-like computer
functions. You can ask them to write a book report, solve a math problem, or create meeting minutes
from an audio recording.
If you haven’t tried one of the LLMs, you should definitely do so. They are changing the way that
people search the internet for answers. Instead of serving up a list of links like search engines do, AI
powered by LLMs answers your question for you in plain English. Some popular LLMs to try are
ChatGPT by OpenAI, Copilot by Microsoft and Gemini by Google.
Companies that implement AI into their business processes will gain an advantage over their
competitors. The LLMs are poised to bring a significant increase in productivity. AI is part of the
reason that U.S. Nonfarm Business productivity was up a total 10.9% after being stagnant for the
prior two years.
Company use of AI will have a direct, negative impact on white collar desk jobs, especially entry
level positions. You can expect this will decrease the cost of labor for businesses as they right-size
their organizations. However if your job requires physical activity (manufacturing, construction, etc.),
your job is safe from AI for now.