The Losers of the AI Revolution Are the People Whose Jobs Are in Danger of Being Automated
The arrival of generative artificial intelligence (gen AI) into the world in 2023 was an exciting historical moment. Humanity had finally managed to create something smart enough to do its bidding. It could compose songs and draw pictures as competently as it could search the web for information. The euphoria was cut short as it dawned on people that if this chatbot could do all that, what would prevent it from doing their job even better than them? This fear was justified. Today, more and more jobs are lost to mechanical and software automation. Menial jobs are slowly erased and replaced with higher-skilled professions. Much of the world population will have to reskill and upskill in the coming years to keep up. Are you one of them?
The Losers of the AI Revolution
The industrial revolution put an end to craftsmanship. In the time before machines could mass-produce identical products, everything was hand-crafted skillfully. As soon as machines were able to produce the same items in a much more cost-efficient manner, much of the skill necessary to make them was obsolete.
A new class of workers had to emerge to support the new production process as the craftsmen were replaced. This process of making jobs obsolete and replacing them with new ones has been happening for generations but it's only now speeding up. This is happening because technology is developing so rapidly that machines are able to do more of the world's work better than people.
We have all heard of how automation can impact physically demanding jobs like warehouse work. Nobody wants to lift heavy boxes all day long but when a machine can do that job, all of a sudden that's one less gainfully employed person in the economy. While it's a boon for every consumer who'll need to pay less for the same product, it's one less salary that goes into the economy.
Low- or zero-qualification work is becoming a thing of the past as both machinery and the software that operates it is capable of more sophisticated and complex tasks. This means only one thing – it's not just the manual labor that is getting replaced – intellectual work is also slowly being taken over.
AI is touted as the pinnacle of human ingenuity and design. After all, the notorious tech market boom of 2023 showed even the nonbelievers that this technology is usable in real-life scenarios. It can drastically cut down on the manhours necessary to complete otherwise time-consuming work.
And while the information technology industry is rallying at a neck-breaking pace and tech companies are reaping the rewards, there are those who are suffering the consequences. The AI revolution has clear winners, but the losers are a little bit harder to discern. Are you one of them?
The Reskilling Age
Nobody is excited about the prospect of a computer taking their place and doing their job instead of them, but more and more people are going to need to learn new skills or improve existing ones if they want to keep working. The World Economic Forum claims something like one billion people would have to reskill or upskill in the following years to avoid redundancy due to automation.
Their estimate is aimed exclusively at work that can be taken over by AI. And since most of what the technology does is quickly scan the internet for information and crunch it, it is exceptionally good at a particular type of task. It can do anything related to sorting through large amounts of data or performing scheduled tasks exceptionally well.
As a result, the jobs threatened the most include clerks, tellers, receptionists, typists, telemarketers and administrative assistants, among others. Essentially, most of the positions that require manual input or sifting through data. Positions such as loan or credit authorizers who need to fill out a straightforward checklist before approving a client are also easily automatable.
The extent of AI's reach is not limited to repetitive tasks only. In fact, what shocked people the most during the rise of OpenAI's ChatGPT platform was its ability to perform creative tasks such as composing songs and writing stories. Any kind of design and creative work is now under fire as well.
What were thought to be the least replaceable jobs in the world due to their intangible value became some of the first to be replicated by the software. This creates another subgroup of jobs that have a high potential to be augmented rather than outright automated. These are professions that can benefit from the use of AI while simultaneously relying on the human touch for direction.
According to the WEF, if you are a bioengineer, an editor, a mathematician, a statistician or a graphic designer, your job is just as likely to be impacted by AI in the coming months and years, just maybe not to the extent that renders you jobless.
It's not all doom-and-gloom though. Even though skills in the workplace are becoming outdated faster than ever and machines are taking over growing segments of the job market, there is plenty of opportunity to capitalize on those shifts.
The Unsuspected Winners
Indeed, one of the ways you can benefit from these developments is to reskill into technology-supporting roles, but not everyone wants to be a techie. Another way is to trace the market winners and participate in their success. And no, I don't mean you should invest in the megcap tech stocks that are already out of steam. They are old news.
Instead, we should take a look at the companies up the supply chain that make all of this possible – the kingmakers of the AI revolution. Those are the lesser-known companies that arguably stand to gain the most out of the technological innovations.
We know that every single AI model runs on powerful microprocessor chips. And we know that Nvidia (NASDAQ:NVDA) is famous for making the best ones out there. Meta (NASDAQ:META) and Google (NASDAQ:GOOGL) buy hundreds of thousands of their chips, so you would be forgiven to think that Nvidia hold the keys to the kingdom. In reality, they're just the designers.
So, who makes their chips then? Have you ever heard of Taiwan Semiconductor or TSMC (NYSE:TSM)? It's the largest chip manufacturer in the world and it supplies most of the industry's microprocessors – from Apple (NASDAQ:AAPL) to Nvidia (NASDAQ:NVDA). They aren't talked about as much because in a gold rush, everybody cares about the gold, not the shovels and the pickaxes that make mining possible.
TSMC occupies an incredibly strategic place in the market because they are one of the few fabricators who can produce chips at scale. Most of the tech companies simply cannot do in-house because it's prohibitively expensive. Market analysts at Susquehanna see the potential for the company to climb up to $250 per share in the next twelve months, which would mark a 47% jump from current prices.
If the whole world relies on the semiconductor industry for microprocessors, do you think they'll become more valuable with time? The tech kings already got their fifteen minutes of fame and made vast amounts of money in the process. If everyone knows who the kingmaker is, do you think they would get the same kind of attention?
In an entirely digital future, the only resource that matters is processing power. And TSMC is quite possibly the one company that can supply it at that scale. If it's got so much influence in the largest industry in the world, do you think it's going to become even more valuable? Unfortunately, the gold and pickaxe analogy doesn't even cut it here. For TSMC, it's like you see smoke coming out of your house and someone's offering you fire insurance.
Technical Analysis of TSMC
Key Price Levels:
- $135: Weekly Key Level which served as resistance and previous all-time high in February 2021 and January 2022. After a recent crash, TSMC dropped to this level but quickly rebounded, forming a V-shaped recovery, highlighting its importance as a strong support.
- $171: The 4-Hour Key Level provided support in June and July 2024 and is now acting as resistance. Surpassing it could continue the move toward the all-time high.
Bollinger Bands Analysis:
- During the recent market crash, TSMC's price dropped below the lower Bollinger Band, often a fake-out in fundamentally sound scenarios. The price has since moved above the middle band, signaling upward momentum. However, the narrowing bands suggest potential sideways consolidation ahead.
Moving Average Convergence/Divergence (MACD) Analysis:
- On August 9, the MACD line crossed the signal line from below, signaling a bullish movement, especially since it happened below the zero line. The widening gap between the two lines on the daily chart shows increasing upward momentum. The MACD line crossing the zero line from below can be another confirmation for continued buying pressure.
Weekly Uptrend Line:
- The upward trendline, established in October 2023, is respected by the price despite a recent break below it due to a broader market breakdown. It can be considered as a strong support.
Contributions
Technical Analysis provided by Tiago Afonso, Banxso Market Analyst.