February TriCord CRU: A New Chapter of AI Is Beginning

It started in earnest this month.  For much of the past year, investors worried about a particular aspect of the future of technology: artificial intelligence (AI) would replace white collar workers and reduce demand for the software – made by companies like Salesforce, Adobe and Workday – used by so many of them. Once the darlings of the internet era, the stocks of those companies are down more than 40% from their highs. Investor concern was focused on a narrow segment of the market; companies outside of software were seen to be beneficiaries.

A few weeks ago, AI software firm Anthropic released a new advanced model (Opus 4.6) capable of synthesizing data and analysis and running teams of coding assistants. What caught the attention of the broader market was Anthropic’s set of industry-specific add-ons to its Claude product, including ones that could perform legal services and financial analysis.  Initial performance results were so good that investors took seriously the potential that an AI system could easily replicate expertise developed over a lifetime or years of corporate development.

Investors aren’t waiting to find out, instead triggering a global stock selloff, from software to legal services, financial data and real estate services. Early this week, financial custodian Altruist announced an AI-powered tax planning tool that send shares of Schwab, insurance brokers, dropping.

AI hit full-fledged boogeyman status yesterday – a tiny, unknown company that a couple of years ago was in the business of importing karaoke machines from China, announced that its AI-driven platform is helping clients manage more freight shipments with fewer people. Trucking and logistics stocks immediately tanked. The Trucking Index of the Russell 3000 Index (large, mid-sized, and small US companies) dropped 6.6%, with CH Robinson falling 15% and Landstar System sinking 16%.

For most of us, the actual potential of AI to replace existing people and processes is just a guess. Enter a (now viral) blog post this week titled “Something Big is Coming,” written by cofounder and CEO of OthersideAI, Matt Shumer. As background, he explains “I’ve spent six years building an AI startup and investing in the space. I live in this world. And I’m writing this for the people in my life who don’t…”

According to Shumer, he is on the front lines, “not making predictions [but] telling you what already occurred in our own jobs, and warning you that you’re next.” His bottom line? “I am no longer needed for the actual technical work of my job … watching AI go from ‘helpful tool’ to ‘does my job better than I do’ is the experience everyone else is about to have.” And if you’re experience with ChatGPT has left you skeptical, he points out that “most people are using the free version of AI tools. The free version is over a year behind what paying users have access to.”

Recent market dynamics notwithstanding, a future dominated by AI labor may be quite profitable for investors.  And the reality is that there isn’t enough computing power (“compute,” in today’s vernacular) or even electricity for AI to do all of the jobs that it’s conceptually capable of doing. But with the so-called “hyperscalers” (Microsoft, Google, Amazon, Meta) planning to spend almost $700 billion on AI infrastructure this year alone, the “future” looks to be much closer than we anticipated.