The AI industry is sending mixed signals, with markets turning red while teams report real productivity gains. In this session I explore why we are living in a split reality, where individuals move faster with these tools but the wider economy is ambivalent. We once assumed juniors would get the biggest lift from AI, yet the newer agentic tools seem to reward senior workers who know how to structure problems and judge output. In this podcast, I look at the evidence behind that shift and explain how these gains collide with the slow grind of organisational processes. I cover: (00:00) AI productivity: A split reality (00:31) Decoding the stock market drop (02:53) Unpacking three years of AI productivity data (06:09) Does AI help junior or senior developers more? (09:54) The surprising group benefitting from AI (11:45) Why is there a productivity gap? (13:08) Most companies need a process overhaul (14:33) Anthropic's alarming discovery (16:45) So, are we moving quickly enough? (17:29) The counterintuitive truth about AI productivity Where to find me:- Exponential View newsletter: https://www.exponentialview.co/ - Website: https://www.azeemazhar.com/ - - LinkedIn: https://www.linkedin.com/in/azhar - Twitter/X: https://x.com/azeem Production by supermix.io and EPIIPLUS1 Production and research: Chantal Smith, Hannah Petrovic and Marija Gavrilov. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.
Full Episode
Today, I want to speak about how AI is creating a kind of split reality, a split reality around productivity. It seems to be creating, increasing and improving productivity at the individual level, but how much is it impacting firms and the wider economy yet? Now, do stay to the end because there is a surprising bit of data that throws more light, perhaps more confusion on all of this.
So let's get started. Why does this question matter anyway? Well, if you've watched the stock market this week, you will know exactly why. The mood around the AI boom turned sour over the NASDAQ and the S&P 500. There have been several days of red. key stocks that have enjoyed incredible gains in the last couple of years and the last few months to an absolute pounding.
Amongst them, the hyperscalers, the cloud companies like Oracle and CoreWeave and Nebius, who are in operation to serve up these AI models for companies like OpenAI and others, really, really in a sea of red. And even the hardware companies like Vertiv, which makes cooling for data centers, having a really, really tough and torrid week.
In another part of the market, not the equity market, the bond market, we saw similar fear emerging. The bond market tends to move slightly differently to the equity markets. But a number of these companies in the AI space are dependent on corporate debt because you're having to raise a lot of money to build out these big data centers.
And so for one example, Oracle's corporate debt took a real hammering down 8% this week. And the CDS, which is a kind of interesting technical financial instrument, it's the cost to ensure the debt of some of these companies spike. It got increasingly more expensive. And that's often a signal that bond investors are a bit nervous about the prospects of those firms. Now,
In truth, the Nasdaq is still above its 50-day moving average, and this is often just the normal ups and downs, but perhaps it isn't. Now, the real driver here are the fears that the revenues won't materialize rapidly enough to pay for the AI infrastructure, particularly so for these new firms moving into serving models like Corweave and Oracle.
Now, for revenues to materialize, we need to see people and companies spending more and more in the generative AI ecosystem. And if companies are going to spend more, they need to be getting something back. And that is where productivity comes in. No productivity, no point, no sales, no revenues. Well, the markets would be right to turn red.
So let's dig into what we can now see from some of the data around productivity three years into this ChatGPT moment. Well, there's an increasing body of evidence that shows that inside firms, inside teams, with individual workers, AI is making people more productive.
Micron, which is a semiconductor company, it makes the high bandwidth memory as it happens is what you need in these AI data centers, reports 30 to 40% productivity gains when their employees use generative AI for code generation and other internal uses. So that's a really, really significant number coming from a company that's not one of the big tech firms.
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