Marks cites Buffett's distinction that productivity gains from Internet and AI may not translate to profitability.
“There's no doubt that the Internet will produce a great increase in productivity. It's not clear that it'll have a positive impact on profitability. And I think the same is true of AI.”
Marks questions whether AI eliminating half of entry-level jobs will translate into profits or just lower consumer prices.
“if you can produce The US GDP and eliminate half the entry level jobs, it could be more profitable or certainly more productive. But the question is, will it be more profitable?”
Marks quotes Buffett distinguishing productivity gains from profitability in technology like internet and AI.
“There's no doubt that the internet will produce a great increase in productivity. It's not clear that it'll have a positive impact on profitability.”
Marks suggests AI savings may accrue to consumers through price competition rather than to company profits.
“If different companies are competing to provide the AI service, maybe they'll compete on price to the point where it's not profitable for them.”
Marks questions whether AI savings will accrue as profits or be competed away through lower prices.
“To whom will the savings accrue? If different companies are competing to provide the AI service, maybe they'll compete on price to the point where it's not profitable for them.”
Marks notes AI could eliminate half of entry level jobs but questions whether productivity gains translate to profitability.
“You say that AI has the ability to eliminate half of entry level jobs. That was the whole conversation because then they cut to something else. But the point is that may be true.”
Marks cites Buffett's point that productivity gains from internet and AI may not translate to profitability, now applied to AI.
“There's no doubt that the internet will produce a great increase in productivity. It's not clear that it'll have a positive impact on profitability. And I think the same is true of AI.”
Marks argues tech companies' incremental profitability is enormous because virtual products have almost no marginal cost.
“Their incremental profitability is enormous. When your product is virtual and you're selling one, you're making some money, you want to sell two, there's almost no cost in the second one.”
Marks states nobody can specify what AI will do, when, for whom, or how much profit it will produce.
“I've never heard anybody tell me exactly what AI will be able to do or when or for whom or how much profit it'll produce and for whom.”