MIT Economist Says AI May Only Take 5% of Jobs, Fears Stock Crash

The much-hyped AI takeover of the US job market is likely overblown — and could hurt the bottom lines of hard-working companies that have invested billions in the technology, according to a leading expert.

Only 5% of jobs will be replaced or greatly assisted by artificial intelligence within the next decade, according to calculations by Daron Acemoglu, an economist and professor at MIT.

“A lot of money will be wasted,” Acemoglu said in an interview with Bloomberg. “You’re not going to get an economic revolution from 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 in capital spending, with a large portion of the money going to AI investments, according to Bloomberg data. .

Spending power has helped boost ChatGPT creator OpenAI’s valuation to $157 billion in a round that closed on Wednesday — even as the firm oozes cash. Rival firm xAI, founded by Elon Musk, is already valued at $24 billion in just over a year since its launch.

Acemoglu argues that current AI systems are still too unreliable to be a viable replacement for humans anytime soon — whether in white-collar office jobs or blue-collar gigs like construction.

“You need very reliable information or the ability of these models to faithfully implement some steps that workers were doing before,” Acemoglu told the media.

“They can do that in some places with human oversight…but in most places they can’t.”

If unrestrained spending continues, it could eventually result in a crash in tech stocks — referred to by Acemoglu as “AI winter” — as technology falls out of favor with incumbents.

Acemoglu also outlined a more troubling possibility — that companies could spend heavily to develop AI technology and cut jobs in the hope that it will reduce their labor needs, only to later reverse course.

“There are now widespread negative outcomes for the entire economy,” he said.

The MIT professor is one of several experts who have predicted that an artificial intelligence bubble will rock 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 early 2000s.