AI Study Says Stocks Already Pricing a Job-Replacement Premium

tech.hindustantimes.com:

Trying to sort winners from losers as artificial-intelligence spreads through the economy? The stock market already is, and it goes way beyond Nvidia Corp. and Microsoft Corp.

A trio of researchers say companies with workforces ripest for AI streamlining are doing something interesting in the market: beating it. Their study, “Generative AI and Firm Values,” by Andrea L. Eisfeldt and Gregor Schubert of the University of California Los Angeles and Miao Ben Zhang of the University of Southern California, is an attempt to quantify shock waves created by the release of the ChatGPT program.

While the idea AI is driving equity returns isn't news to anyone who has watched the Nasdaq 100 surge 44% in 2023, the conclusions in the paper go further. They depict a market that beneath its surface is already making broad judgments about how automation will impact things like cash flows and stock valuation as intelligent systems cement themselves as tools of production.

“Professional investors are making educated guesses about who will benefit from labor efficiencies as technology gets substituted for people,” said Lawrence Creatura, a fund manager at PRSPCTV Capital LLC, speaking generally and not about the study's specifics. “This is simply a repeat of the industrial revolution. Machinery will be taking over tasks that humans were doing previously.”

Caveats to such an investigation are many, starting with the shortness of the period available for review — a mere eight months. Another may be the way the authors figured out which jobs are vulnerable to AI intercession: they asked an AI chatbot to tell them.

Given access to a database of 19,000 workplace tasks plus a raft of data pulled from LinkedIn and earnings calls, the robot oracle sent