Fundstrat\u2019s Tom Lee warned AI is destroying the $450 billion software sector and job losses will follow, predicting a dovish Fed under Kevin Warsh will cut rates as core CPI is forecasted to drop in Friday\u2019s data release.<\/p>\n
Lee told CNBC on Thursday that AI is \u201cwreaking havoc across software\u201d and job losses are \u201csoon to follow.\u201d<\/p>\n
Software companies, which once \u201cate the world,\u201d now face existential threat from AI displacement.<\/p>\n
\u201cIf software shrinks, that\u2019s deflation,\u201d Lee said.<\/p>\n
Don’t Miss:<\/p>\n
The inflation picture shows AI is \u201cactually disinflationary\u201d as core CPI year-over-year is projected to drop to 2.52% in Friday\u2019s January report\u2014matching the 2017-2019 average and signaling a return to pre-COVID inflation.<\/p>\n<\/p>\n
Fed Chair Jerome Powell already subtracts 65,000 monthly from jobs reports knowing revisions are negative.<\/p>\n
Lee argued the stock market won\u2019t care about labor reports because investors wonder \u201chow much of these are gonna be lost in the future due to AI.\u201d<\/p>\n
Markets initially treated Kevin Warsh\u2019s Fed nomination as hawkish, but Lee called that reaction wrong.<\/p>\n
\u201cTrump wouldn\u2019t appoint a hawk,\u201d he said. Warsh wants lower rates but a smaller balance sheet.<\/p>\n
With jobs shrinking and AI disrupting sectors, Lee expects a dovish Fed.<\/p>\n
Fed funds rates sat at 1.5%-2.0% during the 2017-2019 period, suggesting \u201ca lot of room to cut rates\u201d from current levels.<\/p>\n
Trending:\u00a0Blue-chip art has historically outpaced the S&P 500 since 1995, and fractional investing is now opening this institutional asset class to everyday investors.<\/a><\/p>\n AI\u2019s disruption is triggering a major market shift.<\/p>\n Last year, investors bet on the \u201cMagnificent 7\u201d tech giants\u2014Apple (NASDAQ:<\/a>AAPL<\/a>), Microsoft (NASDAQ:<\/a>MSFT<\/a>), Google (NASDAQ:<\/a>GOOGL<\/a>), Amazon (NASDAQ:<\/a>AMZN<\/a>), Meta (NASDAQ:<\/a>META<\/a>), Tesla (NASDAQ:<\/a>TSLA<\/a>), and Nvidia (NASDAQ:<\/a>NVDA<\/a>).<\/p>\n Lee calls them \u201cthe armies\u201d leading the AI revolution.<\/p>\n Now the money is moving.<\/p>\n Investors are rotating into the companies supplying AI\u2019s infrastructure: energy providers, industrial manufacturers, power generators, and chip makers.<\/p>\n These \u201cbullet makers\u201d are capturing the billions in capital expenditures that AI buildout requires, while software companies\u2014the original AI disruptors\u2014face becoming AI\u2019s biggest victims.<\/p>\n Lee predicts this rotation will trigger a 10-20% U.S. market decline as money flows out of the Magnificent 7 and into industrials and financials.<\/p>\n But here\u2019s the twist: this shift favors international markets.<\/p>\n The Mag 7 dominates 55% of U.S. indices, creating heavy tech concentration.<\/p>\n Foreign markets, however, are weighted toward industrials, materials, and diverse sectors\u2014exactly where capital is now headed.<\/p>\n See Also:\u00a0Wall Street’s $12B Real Estate Manager Is Opening Its Doors to Individual Investors \u2014 Without the Crowdfunding Middlemen<\/a><\/p>\n Lee\u2019s bullish January calls for Bitcoin (CRYPTO: <\/a>BTC<\/a>) and Ethereum (CRYPTO: <\/a>ETH<\/a>) didn\u2019t materialize. Crypto suffered a bigger deleveraging shock in October than FTX\u2019s November 2022 collapse.<\/p>\n Two factors derailed recovery. First, the October 10 tariff tweet triggered liquidations.<\/p>\n Just as crypto began recovering\u2014recoveries typically take six to eight weeks and are V-shaped\u2014the Greenland threat triggered another cascade.<\/p>\n Second, FOMO shifted to gold. Crypto investors face \u201cegg on their face\u201d staying in crypto while stocks and gold performed well. Gold\u2019s January surge amplified the psychology.<\/p>\n Despite failures, Lee said crypto \u201clooks really like it\u2019s bottoming because the fundamental story is quite positive.\u201d<\/p>\n The mood at Consensus Hong Kong was \u201chorrible\u201d as investors questioned staying in crypto versus buying gold.<\/p>\n Read Next:\u00a0Designed for investors with strong market convictions, REX Shares builds ETFs for income, leverage, and tactical positioning \u2014 explore the lineup.<\/a><\/p>\n Image: Shutterstock<\/p>\n UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily<\/a>, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets.<\/p>\n Get the latest stock analysis from Benzinga:<\/p>\n This article Tom Lee Says AI Killed Software And Job Losses Are ‘Soon To Follow’<\/a> originally appeared on Benzinga.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Fundstrat\u2019s Tom Lee warned AI is destroying the $450 billion software sector and job losses will follow, predicting…\n","protected":false},"author":2,"featured_media":478395,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,72019,276,277,49,48,193909,103618,35755,186919,61,193908],"class_list":{"0":"post-478394","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-ai-revolution","10":"tag-artificial-intelligence","11":"tag-artificialintelligence","12":"tag-ca","13":"tag-canada","14":"tag-core-cpi","15":"tag-existential-threat","16":"tag-kevin-warsh","17":"tag-software-companies","18":"tag-technology","19":"tag-tom-lee"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/478394","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=478394"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/478394\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/478395"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=478394"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=478394"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=478394"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}