AI is leading to job losses, but not in the way we expected
artificial intelligence (AI)
began its turbo charged rise with the advent of ChatGPT, all the talk has been about how the technology would decimate the workforce, particularly for those in lower-skilled and junior roles.
While this has happened in some sectors, the impact has yet to be felt across the board.
However it appears it is starting to eat up tech jobs, just perhaps not in the way that may have been originally anticipated.
Microsoft
on Wednesday began a latest round of job cuts, with about 9,000 roles set to go across locations and divisions.
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Microsoft to cut some Irish jobs in global cost-reduction push
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Given the huge bet on AI the company has made, it is seen to be figuring out what it can save elsewhere, especially as Wall Street is notoriously twitchy about firms that can't keep costs under control.
To that end, many of the jobs are going to facilitate spending on AI in other parts of the organisation. It appears people are losing jobs not because they are being replaced by AI, but because AI spending has created cost pressures overall.
It's the latest sign of how AI is sucking up resources among Big Tech. Elon Musk's xAI is reportedly burning through
$1 billion
(€850 million) a month, while Microsoft and Google, among others, are eyeing nuclear power as a way to supply electricity to their data centres given how much energy, never mind water, AI servers suck from the national supply.
It's perhaps no surprise then, that some investors are beginning to question how long such spending can last. Jim Chanos, a renowned short seller and veteran of the internet bubble of the late 90s, warned this week that the AI sector may be on course for a pull back, and that could happen quite quickly.
'There is an ecosystem around the AI boom that is considerable as there was for [tech, media and telecoms] back in '99 and 2000,' Chanos told Bloomberg's Odd Lots podcast. 'But it is a riskier revenue stream because if people pull back, they can pull back capex very easily. Projects can get put on hold for six months or nine months, and that immediately shows up in disappointing revenues and earnings forecast if it happens.'
No wonder Microsoft is working so hard to keep costs in check.
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