Growing pains and opportunity: Analyzing what's next in the AI boom

You think about AI and how much market cap has been created over the last year. I think what’s amazing to me is that we are still really early in the AI story.

If you look at all the survey data you see from Fortune 1000 kind of CIOs, what are they doing from an AI perspective?

Right now, they're just, they're doing tests. They're doing beta analysis.

This all came on so quickly.

How do we deploy this to the benefit, and what's kind of the ROI?

We're really early days there.

How do you view the longer-term implications of AI for the economy?

The longer-term implication of this--maybe this even goes to the rates discussion—is, and we are going to have to deal with this as a civilization, as a country, as a world: This is going to destroy jobs.

And that will probably put that supply-demand imbalance for labor in a little bit more favorable position for an employer.

You're not just competing with, you know, two different people working for the same job but maybe with a computer option or a software option.

So I think that is actually deflationary long term because a lot of the productivity is coming from, you know, if you can get 20% productivity, 50% productivity, you don’t need as many workers.

And that might mean a structural increase in the unemployment rate and actually structural, a decline in the inflation rate, potentially. And that's just something that we're going to have to deal with.

I'm bullish on software companies around AI.

Where do you see second-derivative opportunities from AI?

But what makes up software companies? It's mostly software engineers. That's the number one job at all these companies. But they don’t need as many software engineers as they had in the past. You can have a situation where these software companies are actually  generating higher revenue growth because of AI, but they’re also benefiting because they need fewer software engineers to write the code than they did in the past.

So you can have a really nice situation where revenue growth is accelerating and margins are going the right way as well.