The biggest question on Wall Street is whether the AI trade is a bubble or not. It’s the kind of vexing issue that’s sent shares of AI companies to lofty highs and pulled them back down over the course of the last year or more.
But it’s not always as simple as a “yes” or “no,” Vista Equity Partners CEO Robert Smith said at Yahoo Finance’s Invest event on Thursday.
“Some parts of this market are in bubbles, and other parts are very much in a great, investable space,” Smith told Yahoo Finance’s Julie Hyman.
According to the CEO, the electricity needed to power data centers will be the main constraint to building out AI infrastructure in the US, at least in the near term.
“I think in other parts of the global economy, they have an excess of power, relatively speaking. The question is, can they utilize that power to actually power [generative] AI or agentic [AI] or data systems or GPU data centers in a way that is accessible and usable for those who need it?” Smith said.
Still, he said, his companies are already seeing positive momentum from AI, especially in the agentic space.
“I think we have 18 of our companies … [that] already have agentic solutions in the market that are getting installed or have been installed and seeing real results,” Smith said.
Still, AI also raises serious questions about the future of the job market, especially when it comes to entry-level jobs.
An August study by Stanford University found that, “Since the widespread adoption of generative AI, early-career workers (ages 22-25) in the most AI-exposed occupations have experienced a 13% relative decline in employment even after controlling for firm-level shocks.”
Smith, for his part, said that while generative AI will “create massive productivity,” it will also impact certain jobs.
Sales positions could take a particular hit. Smith explained that salespeople spend roughly 15% of their time selling, while the rest is spent writing, taking notes, and developing strategies.
AI agents, however, could take over much of that work, which Smith admits is also performed by entry-level sales prep workers.
“So there’s going to be some shakeout in those parts of the market,” he said.
That kind of shakeout could be taking place at Vista Equity Partners itself. According to the Financial Times, the company is looking to cut its workforce in favor of using AI software for certain roles.
Smith denied that Vista is looking to make cuts as high as 30% but said that the firm is slowing hiring.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.