RELAX, AI ISN’T TAKING YOUR JOB (YET)
Mark Lister, 18 May 2023
Artificial intelligence, or AI, is one of the hottest topics around at the moment.
We've all heard of ChatGPT, which can help you with your homework or write a pretty good anniversary card for your spouse. Apparently.
Many industries are at risk of being disrupted by these advances, potentially leading to some jobs becoming less relevant, or even obsolete.
At the same time, the innovations and potential productivity improvements are exciting.
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Generative AI, as they're calling it, can produce content, chat responses and new designs. That’s different to the AI of the past, which has focused on detecting patterns, classifying data and detecting fraud.
Chegg, a US education company which provides homework assistance and online tutoring, has been one of the first casualties.
It announced its latest earnings results a few weeks ago, which looked solid.
However, it noted a significant spike in ChatGPT use from students which was starting to impact on new customer growth.
The share price fell 48 per cent in response, such is the level of nervousness about what these new technologies could mean for some businesses.
Other industries could feel the brunt of this too, like advertising, the legal profession and parts of the financial services sector.
The Chief Executive of IBM said in a recent interview that about 30 per cent of its non-customer facing roles, such as those in human resources, could be replaced over a five-year period.
It’s not all bad. AI could prove an extremely useful tool, making workers more productive rather than replacing them overnight.
The state of New Mexico has been embracing this trend since 2020, and it claims to have turned some processes that used to take up to a month into 10-minute tasks.
One government department estimates the automation of repetitive jobs could save more than 100,000 human worker hours each year, freeing those staff up to do more important work.
This isn’t new. History is littered with examples of technological advances bringing significant change to workers.
In the 19th century more than half the US workforce was involved in farming. Then came the industrial revolution, and by the 1920s that proportion had collapsed to barely 20 per cent.
In recent decades, it’s been the internet and mobile phones that have changed the way we communicate, shop, and consume entertainment.
David Autor, an American economics professor at MIT, estimates that roughly 60 per cent of employment in 2018 was found in jobs that simply didn’t exist in 1940.
While change is disconcerting for those impacted, over time society adjusts and displaced workers are absorbed elsewhere in the economy.
The net result is almost always an improvement in living standards.
For investors, these trends can’t be ignored.
Technology heavyweights like Amazon, Google, Microsoft and NVIDIA are talking up the opportunities that AI will bring. There are also several exchange traded funds (ETFs) investors could look at to target the AI and robotics space.
Success isn’t a given though, and in some ways tech companies are most at risk of being disrupted by AI.
In contrast, sectors based around tangible assets, such as commodities and real estate, could be some of the least affected by these advancements.
Industries which rely on human contact and technical physical tasks, including healthcare, hospitality and construction, might also be more immune.
None of this change will happen overnight.
ChatGTP, the latest AI poster child, has been described by many as nothing more than a glorified version of autocomplete. It’s limited by its knowledge library, which means inaccuracies and dated information often creeps in.
That said, AI will continue to improve and the pace with which these changes start to impact society could be more rapid than we think.