The much-hyped AI takeover of the US job market is likely overblown – and it could hurt the bottom lines of overzealous companies that have invested billions into the technology, according to a prominent expert.
Just 5% of jobs will be replaced or heavily assisted by artificial intelligence within the next decade, according to calculations by Daron Acemoglu, an economist and professor at MIT.
“A lot of money is going to get wasted,” Acemoglu said in an interview with Bloomberg. “You’re not going to get an economic revolution out of that 5%.”
Major corporations have pumped huge sums of money into the pursuit of advanced AI models in recent years.
In the second quarter of this year alone, Microsoft, Alphabet, Amazon and Meta Platforms combined to pour more than $50 billion on capital expenditures, with much of the money going toward AI investments, according to Bloomberg’s data.
The spending frenzy has helped bolster ChatGPT creator OpenAI’s valuation to a whopping $157 billion in a round that closed Wednesday – even as the firm bleeds cash. Rival firm xAI, founded by Elon Musk, is already valued at $24 billion in little more than a year since its launch.
Acemoglu argues that current AI systems are still too unreliable to be a viable replacement for humans anytime soon – either in white-collar office jobs or blue-collar gigs like construction.
“You need highly reliable information or the ability of these models to faithfully implement certain steps that previously workers were doing,” Acemoglu told the outlet.
“They can do that in a few places with some human supervisory oversight…but in most places they cannot.”
If the unrestrained spending continues, it could eventually result in a tech stock crash – referred to by Acemoglu as “AI winter” – as the technology falls out of favor with executives.
Acemoglu also outlined a more troubling possibility – that companies could spend big to develop AI technology and cut jobs on the expectation that it will reduce their labor needs, only to later reverse course.
“Now there are widespread negative outcomes for the whole economy,” he said.
The MIT professor is one of several experts who have predicted an AI bubble will roil the markets in the near future.
In August, investor and strategist David Roche told CNBC that he expects the economy to enter a bear market in 2025.
He compared the growing hype around AI to the dot-com bubble of the the early 2000s.