AI stocks will likely drag everybody else down very soon. As a student of history, you may already know this pattern has persisted throughout history. We are not ready for the type of AI being preached by the AI evangelists as a species yet. There is no way the world is prepared for most people to not have a job because of AI. Regardless how far long the technology is at now, the type of AI revolution being touted now likely won’t happen any time soon. It’s the poor and nothing to lose nations that love AI, not so much by average Westerners and residents of wealthy nations. Even authoritarian governments fear AI because it might empower those who simply have nothing to lose as they try to find an equalizer. Compounding that with global fragmentation, the geopolitics, privacy issues and many other issues you can think of. The biggest issue is the permanent replacement transition that will likely cause all kinds of social problems.
For one, UBI is not really a thing anywhere right now as many people and governments, probably rightfully so, believe people will become disincentivized to work if they get some kind of living wage UBI. It’s a chicken and egg situation. If there is no UBI, what will happen to all the workers who will be fully replaced by AI among other technological advances? There is simply no path that will allow AI, humanoid robots and other advances to fully replace human beings without causing historical conflicts that will derail much of the progress made throughout the centuries. There literally are robotaxis, self-driving cars and automated cooking machines at the moment that could replace human beings doing these jobs, but it’s not this far. Why? Because transitions take time and you can’t really cut the consumer out of a job that allow them to consume the automated services that the capitalists are dreaming of.
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AI crash coming.
When technology like everything else become commonplace, profit margins will invariably drop, like everything else. When the ATM became a thing, bank teller per branch dropped but their overall number increased for years due to rapid expansion of bank branch due to lower operating costs. Then came the smartphone that took away many teller jobs but their overall number much of the teller workforce also upskilled into more relationship/analysis/IT-adjacent roles. Yes, you guessed it, the human is still part of the equation even though technology has shifted. Computers, smartphones, electronics and anything technology related have essentially all became relatively cheaper overtime for the same or similar technologies. Even with much better features and inflation, the leading smartphones actually gotten cheaper over time when you adjust for hardware and software difference and inflation versus previous years’ models.
Point being, AI completely or even partially replacing human beings at work will likely not happen any time soon as consumerism depends on people making a wage and spend. If there is no collection/distribution of AI tax and no UBI, this economic model won’t work hence it likely won’t happen any time soon. AI industry growth at its current pace will likely stop within a year or two but AI as an industry will likely not collapse within the next five to ten years. AI is only in its infancy stages at this moment. On average, it takes at least a few years for mass adoption of a certain technology and a few years for it to integrate with everything if it integrates at all. Eventually more and more AI companies will go under just like with any other technological product cycles. In the long-run, there will be no AI companies, there will only be companies that use AI to do business if AI does become commonplace. Think about the dot com boom and all the other booms. Eventually, they all got absorbed into the ecosystem.
Humans are the protagonist in this story that everyone wants them to do well. If humans were the protagonists, there likely won’t be any motivation for humans to progress. Think about this, what happened to most of the dot com companies? They either went under or got absorbed. Very few survived under their old business models. Why? Become internet and the website is more of a commonplace utility utilized by virtually every single entity on this planet than some exclusive, monopolistic technology. You know what kind of companies came out of the dot com crash stronger than ever? Those that were able to integrate internet into everyday life and those that support high complex business needs of enterprises. All these companies have super strong brand equity, proprietary technology and wide and deep moats. They also don’t just play defense. They will frequently acquire competitors and spend heavily on R&D to give their moats more breathing room or acquire/develop new lines of businesses to build castles with new moats.