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I’m not buying the doomsday warnings surrounding AI… But white-collar workers should beware of “ConsultGPT”… Don’t touch these three stocks…
1. The world’s richest man is concerned…
Tesla CEO Elon Musk thinks artificial intelligence (AI) could get so good, it may replace humans.
Back in 2017, Musk said, “We would be so far below [them] in intelligence, we’d be a pet, or a house cat.”
Will AI steal our jobs and turn us into domesticated animals?
No!
ChatGPT has taken the world by storm since it launched last November. The chatbot, which can have human-like conversations, has already become the fastest-growing product in history.
In its first two months, ChatGPT gained 100 million users. For perspective, it took Netflix a decade to reach that milestone.
ChatGPT can even write computer code… marketing copy… and children’s books.
This has folks like Elon Musk worried AI will steal all the jobs. This is nothing new. These concerns are as old as time.
When the first printed books with illustrations appeared in 15th century Germany, wood engravers rose up in protest. Worried that machines would put them out of a job, they stopped the presses.
Can you guess what happened?
Machines made it cheaper to produce books, which meant more people could afford them. And somebody had to illustrate all the new books.
A modern-day equivalent is automation in fast-food restaurants.
Walk into a newer McDonald’s these days, and you’ll likely place your order on a giant screen. And some drive-throughs are now operated by robots, which hand you food through the window.
Yet the number of Americans employed in restaurants is at record levels.
2. Will ChatGPT turn San Francisco into the Rust Belt?
Until now, most jobs disrupted by automation were “blue collar.” Machines replaced muscles in factories.
We all thought “white-collar” workers—folks who sit at a desk and type on a keyboard—were immune.
ChatGPT flipped this on its head. Now copywriters, doctors, and lawyers are concerned they could be displaced by AI.
These doomsday warnings surrounding AI are wrong. No technology in history has ever caused mass unemployment.
Consider all the world-changing tech advancements over the past 70 years. Smartphones… the internet… jet engines… PCs, to name a few.
Of the 270 jobs listed in the 1950 US Census, only one was eliminated by automation: elevator operator. Pretty much everyone who wants a job still has a job today.
Sure, AI could replace certain jobs. I called Apple’s customer support last week and spent five minutes talking to a very helpful chatbot. No human needed.
But what usually happens when an industry adopts a new technology is employment rises.
Take Henry Ford and his invention of the assembly line, for example.
This tech made workers far more productive and slashed the cost of making a car. This boosted demand for cars and led to a boom in auto employment.
AI tools like ChatGPT will be our own personal “assembly lines,” making us far more productive. For example, I could spend hours researching, and trying to understand, quantum computing.
Instead, I asked the chatbot to, “Explain quantum computing like I’m five.” Here’s what it said:
Source: OpenAI.com
3. Fine, Stephen… but I want to know which companies will be disrupted by AI first.
Okay, I have a surprising answer for you. (It’s not Google.)
My neighbor works for Accenture (ACN), the $175 billion consulting giant.
His job goes like this…
Some organization calls up Accenture with a question. For example, one of his clients was a prison system wanting to understand the best alternatives to locking people behind bars.
My neighbor does a deep dive into the problem, which involves reading a bunch of stuff and talking to people. Then he hands a research report to the client six weeks later.
Don’t get me wrong… my neighbor is a smart guy who works hard. But a lot of consulting is basically college assignments for grown-ups. The difference is they charge you millions of dollars to put together a “college paper.”
Consulting firms are among the best businesses in the world. They print cash. The world’s top 10 consulting firms generated tens of billions of dollars in revenue last year.
They’re prestigious places. If my son or daughter gets offered a job by McKinsey, Bain, or Boston Consulting Group… I hope they’ll take it.
But I also think consulting firms could be disrupted by AI tools like ChatGPT.
Did you know ChatGPT recently passed the bar exam? Its grades were good enough to earn a law degree.
It also got an MBA from Ivy League Wharton School of Business. Without any specific training, a computer program passed an exam which usually takes (smart) humans two full years of study.
In other words, ChatGPT delivers “expertise” on demand today. It can already write college papers better than most students… for a fraction of the cost… in a fraction of the time.
Why couldn’t the chatbot put together “grown-up assignments” and sell them for millions of dollars? That would put it in direct competition with consulting giants like Accenture and McKinsey.
This disruption may be a few years off, but it’s coming. Some aspiring entrepreneur will build an “AI consulting bot” on top of ChatGPT (there’s a business idea for you).
And that will eat into consulting firms’ profits.
I think consulting stocks like Accenture and Verisk Analytics (VRSK) have topped out. I wouldn’t touch them.
I’d also dodge the upcoming IPO of Big Four accounting firm Ernst & Young’s advisory business.
Its consulting arm generated $26 billion in revenue last year and employs 166,000 advisers.
But “ConsultGPT” is coming for a lot of them.
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