Tom Lee Says AI Killed Software And Job Losses Are 'Soon To Follow'

Fundstrat’s Tom Lee warned AI is destroying the $450 cardinal bundle assemblage and occupation losses volition follow, predicting a dovish Fed nether Kevin Warsh volition chopped rates arsenic halfway CPI is forecasted to driblet successful Friday’s information release.

Lee told CNBC connected Thursday that AI is “wreaking havoc crossed software” and occupation losses are “soon to follow.”

Software companies, which erstwhile “ate the world,” present look existential menace from AI displacement.

“If bundle shrinks, that’s deflation,” Lee said.

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The ostentation representation shows AI is “actually disinflationary” arsenic halfway CPI year-over-year is projected to driblet to 2.52% successful Friday’s January report—matching the 2017-2019 mean and signaling a instrumentality to pre-COVID inflation.

Fed Chair Jerome Powell already subtracts 65,000 monthly from jobs reports knowing revisions are negative.

Lee argued the banal marketplace won’t attraction astir labour reports due to the fact that investors wonderment “how overmuch of these are gonna beryllium mislaid successful the aboriginal owed to AI.”

Markets initially treated Kevin Warsh’s Fed information arsenic hawkish, but Lee called that absorption wrong.

“Trump wouldn’t name a hawk,” helium said. Warsh wants little rates but a smaller equilibrium sheet.

With jobs shrinking and AI disrupting sectors, Lee expects a dovish Fed.

Fed funds rates sat astatine 1.5%-2.0% during the 2017-2019 period, suggesting “a batch of country to chopped rates” from existent levels.

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AI’s disruption is triggering a large marketplace shift.

Last year, investors stake connected the “Magnificent 7” tech giants—Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Meta (NASDAQ:META), Tesla (NASDAQ:TSLA), and Nvidia (NASDAQ:NVDA).

Lee calls them “the armies” starring the AI revolution.

Now the wealth is moving.

Investors are rotating into the companies supplying AI’s infrastructure: vigor providers, concern manufacturers, powerfulness generators, and spot makers.

These “bullet makers” are capturing the billions successful superior expenditures that AI buildout requires, portion bundle companies—the archetypal AI disruptors—face becoming AI’s biggest victims.

Lee predicts this rotation volition trigger a 10-20% U.S. marketplace diminution arsenic wealth flows retired of the Magnificent 7 and into industrials and financials.