Artificial intelligence (AI) may significantly displace workers and disrupt consumption-driven economies like the US in the near future, according to Alap Shah, co-author of a Citrini Research report that fueled a scare-trade selloff, and who is now calling for an AI tax to cushion job losses.
Governments should consider taxing incremental or windfall gains from AI, Shah, chief investment officer at Lotus Technology Management, said in a Bloomberg TV interview. Without it, rising unemployment will hit consumption, with the US likely among the most affected. Shah sketched out a scenario where 5 percent of white-collar workers could be cut within 18 months.
“We generally have a set of shorts out against businesses that we think are going to be disrupted by AI,” he said yesterday in Asia. “On the other side of that, we own a lot of semiconductors that we think are going to benefit.”
Photo: Reuters
Technology shares have slid in recent weeks on fears AI could upend business models, with the weekend report from Citrini Research adding to concerns about widespread disruption and job losses. The paper imagines a 2028 world in which rapid advances in machine intelligence turbocharge productivity but render large swaths of human labor obsolete, sparking job losses, collapsing consumer spending and dragging down stock indexes like the S&P 500.
Among the outcomes discussed, the displacement of white-collar workers creates a negative feedback loop where firms cut jobs to bolster margins, reinvest savings in AI, which enables further cuts. This weakens demand in sectors built on intermediation such as finance, insurance and software. Consumer-facing platforms that rely on discretionary spending — including food delivery services such as DoorDash and Uber Eats — are seen most at risk.
The report contributed to a global selloff in software stocks, with a related exchange-traded fund tumbling 4.8 percent and extending its decline from a peak in September last year to around 35 percent on concerns AI could cannibalize earnings.
In contrast, Asia’s bellwether chipmakers rallied to record highs yesterday. Taiwan Semiconductor Manufacturing Co (台積電), Samsung Electronics Co and SK Hynix Inc each gained more than 2.5 percent.
Shah said he’s surprised by the market reaction. “I thought there was going to be a small reaction — it was definitely larger than we expected,” he said.
Over the next five years, he said white-collar jobs in the US will be a key gauge of AI’s effects, with the impact likely to show up fastest there given its dynamic labor market. White-collar workers account for 50 percent of employment and drive roughly 75 percent of discretionary consumer spending, according to the Citrini paper.
“It’s much easier to fire folks than it is in other parts of the world,” he added.
Drawing a lesson from China, Shah said automation there has “rolled through the economy in a big way.” Companies aren’t creating jobs at the pace needed as the average firm can do far more with fewer workers — and increasingly choose not to hire. That weakens consumer demand and weighs on the economy, a scenario he sees as possible for the US over the next two years.
In the near term, Shah expects further market swings, including in software companies, as traders assess the long-term impact from AI. “We are entering a really highly volatile time in the markets,” he said.
Citrini has been publishing macro and thematic stock research since 2023. The platform has built a devoted following, with more than 119,000 subscribers. Its research spans topics from modern warfare and humanoid robots to GLP-1 drugs and broader macro trends.
ENERGY ISSUES: The TSIA urged the government to increase natural gas and helium reserves to reduce the impact of the Middle East war on semiconductor supply stability Chip testing and packaging service provider ASE Technology Holding Co (日月光投控) yesterday said it planned to invest more than NT$100 billion (US$3.15 billion) in building a new advanced chip testing facility in Kaohsiung to keep up with customer demand driven by the artificial intelligence (AI) boom. That would be included in the company’s capital expenditure budget next year, ASE said. There is also room to raise this year’s capital spending budget from a record-high US$7 billion estimated three months ago, it added. ASE would have six factories under construction this year, another record-breaking number, ASE chief operating officer Tien Wu
The EU and US are nearing an agreement to coordinate on producing and securing critical minerals, part of a push to break reliance on Chinese supplies. The potential deal would create incentives, such as minimum prices, that could advantage non-Chinese suppliers, according to a draft of an “action plan” seen by Bloomberg. The EU and US would also cooperate on standards, investments and joint projects, as well as coordinate on any supply disruptions by countries like China. The two sides are additionally seeking other “like-minded partners” to join a multicountry accord to help create these new critical mineral supply chains, which feed into
For weeks now, the global tech industry has been waiting for a major artificial intelligence (AI) launch from DeepSeek (深度求索), seen as a benchmark for China’s progress in the fast-moving field. More than a year has passed since the start-up put Chinese AI on the map in early last year with a low-cost chatbot that performed at a similar level to US rivals. However, despite reports and rumors about its imminent release, DeepSeek’s next-generation “V4” model is nowhere in sight. Speculation is also swirling over the geopolitical implications of which computer chips were chosen to train and power the new
Intel Corp is joining Elon Musk’s long-shot effort to develop semiconductors for Tesla Inc, Space Exploration Technologies Corp and xAI, marking a surprising twist in the chipmaker’s comeback bid. Intel would help the Terafab project “refactor” the technology in a chip factory, the company said on Tuesday in a post on X, Musk’s social media platform. That is a stage in the development process that typically helps make chips more powerful or reliable. The chipmaker’s shares jumped 4.2 percent to US$52.91 in New York trading on Tuesday. The Terafab project is a grand plan by Musk to eventually manufacture his own chips for
RSS