Keep calm and AI on

AI is more likely to disrupt the economy while creating substantial value than to destroy jobs, economic growth or investment opportunities.

• The author compares current fears about AI to historical anxieties over railways, industrialization, electricity, computers, ATMs and the internet, arguing that technological disruption should not be confused with technological destruction.
• AI-related existential risks are described as overstated because AI lacks desires and goals of its own; in a reported hacking test, humans could have intervened repeatedly and many agents would eventually have exhausted their budgets.
• Historical mechanization supports the employment argument: US agricultural workers fell from 10.9 million in 1900, feeding 76 million people, to 7.5 million in 1950, feeding 151 million, while labor shifted into manufacturing, services, medicine, finance, technology and new industries.
• Global life expectancy rose from roughly 32 years in 1900 to more than 70 today, which the author attributes in large part to improvements in medicine, sanitation, nutrition, productivity and technology.
• AI infrastructure spending is about 2.5% of US GDP, comparable to railway spending in the 1870s, while high-end computing prices are rising, chip demand exceeds supply and billions of dollars are being invested in new capacity.

Takeaway: Investors should remain calm and maintain a carefully considered allocation to AI, looking beyond chips to networking, memory, power, transmission, transformers, cooling, data centers and semiconductor equipment, while recognizing that disruption will still occur.