Howard Marks Says AI Terrifying for Jobs, Queries Debt Cost

Core Viewpoint - The rise of artificial intelligence (AI) presents a concerning outlook for employment, with potential for increased social and political division due to job displacement caused by technology [1][2]. Group 1: Employment and Social Impact - AI technology may lead to significant job losses, particularly affecting millions of workers, while benefiting a small number of highly educated billionaires [2]. - The potential for social and political division is heightened, creating an environment susceptible to populist movements [2]. Group 2: Corporate Investment and Debt - Major tech companies like Microsoft, Alphabet, Amazon, Meta, and Oracle are engaging in a "winner-take-all arms race," resulting in aggressive debt accumulation to maintain competitive advantages in AI [2]. - Over $161 billion in data-center related credit deals have been made in the U.S. this year, indicating Wall Street's readiness to finance AI investments despite the long-term uncertainty of returns [3]. Group 3: Speculation and Investment Risks - Investors are exhibiting speculative behavior in the AI sector, with the demand growth for AI technology being highly unpredictable [4]. - The yield on 30-year bonds from companies like Meta and Alphabet is approximately 100 basis points higher than comparable U.S. Treasuries, reflecting the perceived risk associated with long-term AI investments [4]. Group 4: Long-term Viability and Caution - There are concerns regarding the prudence of committing to long-term investments in technology that may not yield sufficient returns to cover debt obligations [5]. - The current enthusiasm for AI technology may be excessive, and it will take years to determine if this excitement was rational or not [5]. - Companies are advised to balance their investment strategies, acknowledging the risks of both overcommitting and missing out on significant technological advancements [6].