3 Stocks Most Likely to Be Hurt by the Rise of AI

3 Stocks Most Likely to Be Hurt by the Rise of AI

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Artificial intelligence is expected to perform many types of jobs that humans currently do. In most cases, that change will greatly help companies since computers are much cheaper to train and maintain than human employees. But what about the firms that currently provide the services that AI will carry out?

In the future, instead of paying those firms large amounts to perform those tasks, their current customers will deploy AI systems to do them instead. As a result, the firms’ stocks are likely to take major hits over the longer term. Among the sectors that will probably be victimized by the latter phenomenon are advertising agencies and companies that provide computer programmers to other firms. Finally, businesses that offer services for workers in certain sectors are likely to take hits as the number of employees in those spaces tumbles. Here are three stocks most at risk of AI.

WPP Inc (WPP)

graphic of man using megaphone to talk into giant megaphone towards group of people, conveying idea of advertising
graphic of man using megaphone to talk into giant megaphone towards group of people, conveying idea of advertising

Source: VectorKnight/shutterstock.com

WPP (NYSE:WPP), which owns advertising agencies and PR firms, is likely to take a big hit from the proliferation of AI. That’s because writing is a core function within both of those spaces, and AI is quite good at writing.

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Anu Madgavkar, a partner at the prestigious consulting firm McKinsey, said that “AI is able to read, write and understand text-based data well.”

Moreover, many AI-powered tools have already been released for diverse marketing tasks such as “SEO content writing” and digital advertising.”

Making the outlook for WPP even worse, the International Monetary Fund has predicted that AI could eventually eliminate roughly 50% of marketing positions.

The proliferation of AI may already be negatively impacting the firm, as its revenue, excluding acquisitions, is expected to fall 1% this year, while Swiss bank UBS (NYSE:UBS) predicts that its free cash flow will be “depressed.”

Wipro (WIT)

Binary code data
Binary code data

Source: carlos castilla/Shutterstock

Indian-based Wipro (NYSE:WIT) provides computer coders to other companies. The demand for Wipro’s services is likely to tumble sharply if AI becomes more productive and consistent than computer programmers.

“Advanced technologies like ChatGPT could produce code faster than humans, which means that work can be completed with fewer employees,” a Brookings Institute researcher said.

Wipro is helping its clients deploy AI. But over the longer term, as those initial deployments are completed and the technology keeps eating into its core coding business, I expect the company to be negatively impacted by the AI Revolution.