The message from investors to the software, asset management, legal services and logistics industries this month was clear. “AI is coming to your business.”
The release of new, more powerful AI tools coincided with the stock market decline, sweeping sectors as diverse as pharmaceutical distribution, commercial real estate, and price comparison sites. There is growing credence in predictions that advances in technology could make millions of white-collar jobs obsolete, or at least eat into the profits of incumbent companies.
Karl Benedict Frey, author of How Progress Ends and associate professor of AI at the University of Oxford, said investors are reassessing the value of companies that rely heavily on software sales and expertise.
“AI transforms once-scarce expertise into cheaper, faster, and increasingly comparable outputs. This compresses profit margins long before entire jobs disappear.”
This week, an essay written by AI entrepreneur Matt Schumer titled “Something Big is Happening” amplified concerns about widespread job losses. In it, Schumer compares the current moment to February, just before the coronavirus pandemic, explaining to the world outside of Silicon Valley that there will be a new model for coding jobs and, after that, “everything else.”
The post was viewed 80 million times on X and sparked fear and anger, including from those who pointed out that Schumer had a history of AI hype. (He previously excited the internet by announcing the release of the world’s “top open source model,” but that wasn’t actually the case.)
Shumer and the market were reacting to the capabilities of recently released models such as Anthropic’s Claude Opus 4.6 and OpenAI’s GPT-5.3-Codex. Both are improvements on previous powerful AI products.
But there are other reasons for the current craze, especially for the companies building these models. AI “hyperscalers” (a term used to refer to large US tech companies in this field) plan to spend a total of $660bn (£484bn) this year. This follows a year of huge and often circular deals between the world’s biggest technology companies.
But cracks are appearing in these numbers, raising questions about what they actually mean. Nvidia and OpenAI recently scrapped a $100 billion contract and appear to have replaced it with a smaller deal that is not yet known.
On the other hand, none of the AI model building companies other than OpenAI, xAI, and Anthropic have a clear path to significant revenue to justify this expense. The entire global software sector is expected to generate just $780 billion in revenue this year.
It became clear this week that both arguments about AI – that it’s an unsustainable boom and that it heralds a disruptive revolution in white-collar work – are being embraced by some investors, after shares in Google’s parent company Alphabet and Mark Zuckerberg’s Meta were affected by apparent concerns about a consumer bubble.
Frankly, investors expect these companies to recoup their investment through large numbers of individuals and companies paying for tools that allow them to perform specific tasks and jobs with fewer people and in less time. In economic terms, it’s a productivity boom.
“These two themes are inherently related, but not necessarily contradictory,” says Jason Borborashine, a portfolio manager at investment management firm NinetyOne.
In the early stages of the AI gold rush, investors initially supported spending by “hyperscalers.” Those concerns have now translated into cash burn and the massive investments needed to remain competitive, Borborasheen said, but at the same time, asset managers and other stock prices are being affected by the realization that AI is “here to stay, and it can evolve and be replaced.”
Companies are citing AI as an impact on their layoff plans, including British American Tobacco this week, but a wave of large-scale disruption has yet to occur. Greg Thwaites, research director at the UK think tank Resolution Foundation and an associate professor at the University of Nottingham, said the evidence that AI jobs will have a tangible impact on large Western economies is “quite vague at the moment”.
While not all white-collar jobs will be affected, AI could test the axioms around the age-old capitalist concept of “creative destruction,” he says. This includes entirely new jobs replacing outdated jobs, such as auto mechanics replacing farriers. Will it be a different case with AI? Is it because change is happening too fast or because AI is better at everything?
“There are some jobs that can change a lot very quickly, but the idea that within a few years there will be a bunch of unemployed lawyers and accountants wandering around London seems far-fetched to me.”
Forrester analyst Alvin Nguyen said the concerns that rocked the stock market were based on sentiment rather than evidence, and that no one had time to evaluate the performance of asset managers using Opus 4.6.
“It’s an inevitable reaction,” he said. “How true is that? Look, there are a lot of leaders who initially thought they could replace humans with AI. And a lot of people acted on that. And I think one of the things that’s turning out is, in many cases, no, it didn’t work.”
Aaron Rosenberg, a partner at venture capital firm Radical Ventures, which also invests in leading AI company Cohere, and former head of strategy and operations at Google’s AI arm DeepMind, said the long-term impact of AI has been underestimated, but the adoption of breakthrough models has been uneven.
“History has repeatedly shown a pattern where there is a long lag between technology working in the lab and its penetration into the broader economy, with a gulf between early adopters and the majority of users,” he says.
More new models are expected to appear. Other big AI deals could wobble as well. Meanwhile, this month has seen some low-level complaints from prominent tech workers. Many people are leaving AI companies for a variety of reasons, including boredom, AI fatalism, and concerns about the potential for adult content on ChatGPT.
There’s a nervous, unfocused energy in the air. Borbora-Sheen said: “There is a strong dynamic of winners and losers.”
