AI Boom: What Matters Is Who Comes Out on Top

The expansion of artificial intelligence is driving both stock markets and US economic growth. Expectations are high for a spectacular increase in labour productivity. At the same time, however, there are warnings of equally dramatic job losses. “The debate is dominated by extremes: mass unemployment on the one hand and a productivity miracle on the other,” says Thorsten Fischer, Managing Director and Head of Portfolio Management at Moventum AM. “But the reality is more complex.” Some will benefit from AI, while others will lose out. This applies to employees and investors alike.

The AI boom is in full swing. Over the past eight quarters, US companies have increased their real IT investment at an annualised rate of almost 25 per cent. The key question currently facing financial markets is whether this spending will pay off. That depends on whether businesses embrace AI, which in turn depends on whether the technology delivers the anticipated productivity gains. If it does, it could theoretically make large numbers of jobs redundant. “AI is therefore both a driver of growth and a source of uncertainty,” Fischer explains. Is unemployment the price of the technology boom?

It is important to make a distinction here. AI does not replace entire jobs; rather, it primarily changes individual activities and tasks. “Some tasks will be automated, while others will remain,” says Fischer. Overall employment is therefore likely to remain stable. Furthermore, when work becomes more efficient, the products and services it generates become cheaper, which in turn stimulates demand.

Artificial intelligence is primarily taking over routine tasks such as research, documentation, drafting texts and basic analysis. These are traditionally the responsibilities of people entering the workforce, making them particularly vulnerable. This is already reflected in the data: according to the Stanford Digital Economy Lab, employment among 22- to 25-year-olds in occupations most exposed to AI is almost one-fifth lower than in less exposed occupations. A year earlier, the gap was just 13 per cent. “Companies are not laying people off; they are simply hiring fewer new employees,” Fischer explains. “So it is not those who already have a job who are affected, but those who are still looking for one.”

This also has implications for existing employees: AI is raising the skills requirements, as demand for routine tasks declines while the need for judgement, creativity and communication skills increases. “Work is shifting towards higher-value activities,” says Fischer, “creating new opportunities for employees.” The question, therefore, is not “Crisis or boom?” but rather “Who benefits, and who loses out?”

The same applies to investing. For now, AI remains primarily an infrastructure investment theme. According to Swiss bank UBS, investment in semiconductors, energy, storage and computing capacity is expected to rise by a third next year, reaching USD 1.2 trillion. It is not only the well-known hyperscalers that stand to benefit, but also less prominent companies. “The challenge for investors is therefore to be selective,” says Fischer. While there will be many winners, there will also be plenty of misjudgements. Neocloud providers, which depend on access to affordable financing, have recently come under pressure. But even among the hyperscalers, the winners are beginning to emerge. “Companies that finance their AI investments from cash flow will be valued differently from those that have to go into the red to fund them.”

The lesson is clear: not everything associated with AI will generate sustainable returns. “Investors should therefore invest in the transformation, not the hype,” Fischer explains. The focus should be on the structural winners of the AI revolution – not only in applications, but above all in the infrastructure that makes AI possible in the first place.

Will the AI bubble burst? At some point, it probably will. “But that will not mean the end of the world. Instead, it will reveal which companies have genuine substance and which have simply been carried along by the wave of enthusiasm,” says Fischer. He therefore offers investors three pieces of advice: “Diversify globally, be selective and focus on sustainable trends rather than short-term narratives.”