Yardeni Research pushed back on expansive claims about artificial intelligence, saying that although large language models (LLMs) produce sophisticated-sounding text, they do not genuinely understand meaning. In a Tuesday note, the research firm summarized its stance plainly: "We still believe that AI is artificial but not intelligent," adding that "these models don’t have a clue about what words actually mean."
The firm flagged growing worries that AI could displace human workers, particularly in white-collar occupations, and suggested that any widespread movement of displaced employees into lower-paying roles could weaken consumer spending and eventually affect blue-collar employment.
Yardeni pointed to payroll data as evidence of emerging softness in the technology sector. The firm noted that employment in information technology has been essentially flat since late 2022, the time when ChatGPT was first released, suggesting the labor market has not continued expanding in that segment.
Despite these concerns, Yardeni stopped short of endorsing the most severe dystopian scenarios. It said the market has on occasion behaved as if pricing in a darker outcome in which AI becomes a "Frankenstein monster," but the firm does not subscribe to that view. Instead, Yardeni expects AI to be more of a productivity enhancer than a wholesale job eliminator, writing, "We continue to believe that AI is augmenting workers’ productivity rather than making them extinct."
Yardeni also highlighted how AI-related stories are already shifting investor sentiment. The firm cited the market pressure that followed publication of a Citrini Research report titled "The 2028 Global Intelligence Crisis." It further pointed to additional downward pressure on equities after a sharp fall in IBM's share price amid reports that Anthropic may have developed an agent capable of challenging IBM’s COBOL software.
Looking forward, Yardeni said it expects Nvidia's upcoming earnings call to strike a more upbeat chord. The firm anticipates that CEO Jensen Huang will present "a much more upbeat view of AI’s impact on our future," a tone that Yardeni believes could prove constructive for sentiment around AI-related investments.
Beyond AI-specific commentary, Yardeni reiterated several of its broader market views. The firm said the rotation it highlighted in December - away from the Magnificent-7 toward the rest of the market - remains intact. That shift has coincided with a movement from U.S. equities into international markets, Yardeni added.
Yardeni also tied continuing AI uncertainty and tariff developments to movements in gold, saying those factors are helping to push the metal toward the firm's year-end target of $6,000 per ounce this year and a longer-term target of $10,000 per ounce by 2029.
Context and implications
- Yardeni emphasizes a cautious interpretation of LLM capabilities while acknowledging potential productivity gains.
- Labor-market data and high-profile AI headlines are already affecting investor sentiment and equity prices in specific instances.
- The firm maintains broader positioning views, including a sector rotation away from the largest tech names and toward international markets, and continues to cite macro drivers for gold's trajectory.