Artificial intelligence will multiply corporate profits, but not in the way most economists currently predict. And now is the time for investors to buy Amazon.co.uk (AMZN) share, enlighten Jon Markmaneditor at Weiss Daily Ratings.
Amazon executives recently announced the demolition of nine office towers in Virginia. The online retailer will eventually use the space to build new state-of-the-art data centers. Let me explain why this is important.
Blue-collar America has been under siege for decades. Automation, followed by offshoring, wiped out the domestic manufacturing wage bill. At its peak in 1979, the manufacturing sector accounted for 22% of all American jobs, according to data from the Bureau of Labor Statistics. In 2020, the National Association of Manufacturers noted that number had dropped to just 8.6%.
But all is not bad. The average manufacturing worker in the 1960s produced about $40,000 worth of output per year. Annual output per worker is now over $200,000 and continues to rise. Operations that previously required teams of workers are now carried out by two or three people with computers and robots.
Doing more with less is what economists call productivity, the great creator of wealth. AI now brings productivity to knowledge work
McKinsey, the global business consulting firm, studied 63 AI use cases across 16 business functions. The researchers concluded that the total economic impact of AI could be between $7.1 trillion and $26.5 trillion, with the main beneficiaries being sales, marketing and software engineering.
It makes sense. Intelligent AI chatbots are indistinguishable from humans. The software even seems to think like humans, drawing logical conclusions and solving problems rationally. This makes AI chatbots the perfect tool to streamline customer support operations.
Amazon.com (AMZN)
AI software engineering will also be a game changer.
ChatGPT is best known for generating compelling responses to user prompts. However, the software platform, and a growing list of others, is capable of writing working software code from a simple natural language prompt. Type in what you want the code to do in plain English, and the chatbot spits out the code, ready to go.
Amazon.com tearing down office towers to build data centers makes so much sense. The future of the Seattle-based company lies in data centers, not office towers.
Amazon.com is in a perfect position. Its huge online retail business is ripe for the deployment of an AI chatbot. And its white-collar operations, including the AWS cloud services business, will benefit from software-based generative AI.
Recommended Action: Do your own due diligence, but investors should use weakness to buy AMZN.
