Investing.com — Yardeni Research pushed back against the growing hype around AI, arguing that despite rapid advances in large language models (LLMs), the technology still lacks true understanding.
“We still believe that AI is artificial but not intelligent,” Yardeni said in a Tuesday note, adding that while the output of LLMs may sound sophisticated, “these models don’t have a clue about what words actually mean.”
The market research firm flagged rising concerns that AI could eventually displace human workers, particularly in white-collar roles. It pointed to the possibility that if such workers are forced into lower-paying jobs, consumer spending could weaken and spill over into blue-collar employment.
Payroll data already show softness in the tech sector, with employment in information technology flat since late 2022, when ChatGPT was first released, Yardeni noted.
The firm said that equity markets have at times appeared to price in a more ominous scenario in which AI becomes a “Frankenstein monster,” though it does not share that extreme view. Instead, Yardeni believes that AI is more likely to boost productivity than eliminate large swaths of jobs.
“We continue to believe that AI is augmenting workers’ productivity rather than making them extinct,” it wrote.
Yardeni also addressed how AI-driven headlines are already influencing market sentiment. They said equities were pressured following the release of a Citrini Research report titled “The 2028 Global Intelligence Crisis.”
Additional weakness came after a sharp drop in ’s stock price amid reports that Anthropic may have developed an agent capable of challenging IBM’s COBOL software.
Looking ahead, Yardeni expects a more constructive tone from Nvidia’s (NASDAQ:NVDA) upcoming earnings call, where CEO Jensen Huang is anticipated to present “a much more upbeat view of AI’s impact on our future.”
Beyond AI, the firm reiterated its broader market views. It said the rotation it flagged in December—from the Magnificent-7 toward the rest of the market—remains in place, alongside a shift from U.S. equities to international markets.
Moreover, ongoing AI uncertainty and tariff developments are helping push toward its year-end targets of $6,000 per ounce this year and $10,000 by 2029, Yardeni added.