A global labor shortage estimated to reach 80 million by 2030 is expected to provide a big boost to technology stocks. Tom LeeResearch Director of Fundstrat Global Advisors.
what happenedAccording to Business Insider, Li predicts that the technology sector's share of the S&P 500 will increase to 50% from the current 30%, citing artificial intelligence's potential to boost productivity and address looming labor shortages.
Lee's statement: NVIDIA(NASDAQ:NVDA) reported impressive first quarter earnings, sending the company's stock up 10%. He believes the AI story is still in its early stages and that there will be a shift from traditional wage expenditures to increased investment in AI technology.
“The prime-age workforce is growing more slowly than the overall global population, and in 10 years' time the gap will be around 80 million people. Without an AI-driven productivity surge, there will be huge pressure on companies and incentives to innovate. This means we will start to see a shift from annual wage spending to silicon spending,” Lee said.
Lee estimated that companies will collectively spend about $3.2 trillion a year on AI technology to combat the growing labor shortage, and stressed that Nvidia, with annual revenue approaching $100 billion, stands to benefit greatly from this increased spending.
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The possibility that a labor shortage could cause a tech stock boom is not a new phenomenon, Lee noted, pointing to previous examples of global labor shortages that led to big tech stock rallies, including from 1948 to 1967 and from 1991 to 1999.
Why is this important?: The global labor shortage is a significant issue that is not limited to the technology industry. In April 2023, US technology giants faced challenges in reducing their European workforce due to stringent labor laws. This issue could have far-reaching effects on various industries and could bring about major changes in the global economy.
While technology stocks could surge, some experts warn the market may not have hit bottom yet. Jim Cramer Lee warned against buying on dips, as the market could fall further.
But the AI-driven stock rally continues to gain momentum, with Nvidia shares surpassing $1,000 on Thursday as the stock market reclaimed all-time highs. This continued rally suggests that the potential for AI to drive a surge in tech stocks is an important factor to consider in the current market environment.
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Image courtesy of Pixabay
This story was written and edited with Benzinga Neuro. Kaustubh Bagalkote
