In a recent episode of the Art of Investing podcast, Brad Gerstner, CEO of investment firm Altimeter Capital, made a sobering prediction about the future of employment, stating that “AI is going to be the largest displacement of human labor in the history of capitalism.” While acknowledging the potential for significant disruption, Gerstner outlined a gradual transformation rather than an abrupt workforce reduction.
Contrary to the notion of mass layoffs, Gerstner anticipates a slower pace of hiring at companies due to improved productivity through AI. Using the example of a 50% boost in engineer productivity and a 20% growth in a company’s top line, he emphasized that the need for new hires could diminish. Altimeter Capital, with investments in both private and public companies globally, has gained recognition for notable ventures like Zillow, ByteDance, and Snowflake.
This perspective diverges from the outlook of Nvidia CEO Jensen Huang, who believes that the advent of AI will lead to overall job creation rather than displacement. Huang argues that increased productivity results in prosperity, prompting successful companies to expand and hire more people.
Gerstner acknowledged the winners and losers in the evolving economic landscape, likening it to historical transitions such as the shift from horses to cars. Despite the potential negative impact on certain companies and individuals, Gerstner, describing himself as an “American optimist,” emphasized the importance of understanding the unequal distribution of benefits during periods of human progress.
Altimeter Capital’s role in venture capital allowed the firm to identify public companies poised to benefit from the AI boom. Gerstner highlighted the positive performance of the public portfolio, emphasizing strategic positioning around companies like Nvidia, Microsoft, Amazon, and Snowflake. While recognizing the downsides of AI, he advocated for a legislative program called Invest America, aiming to create private investment accounts for children born in the U.S., fostering financial literacy and providing a counterbalance to the potential downside of AI-related job displacement.
