Companies reducing headcount through AI are not likely to return those savings directly to shareholders, according to a PwC executive.
In an interview with The Information, Dallas Dolen, PwC’s tech, media and telecommunications industry leader, says the financial gains from AI-driven efficiency are being redirected into infrastructure and new growth initiatives.
According to Dolen, companies will prioritize building their own vertically integrated AI stack, covering silicon to software.
“We’ve seen this incredible rotation out of software margins, which we’re talking about here, into hardware margins.
You also then see this desire, so to say, or really, maybe it’s a critical feature of future relevancy, to own the infrastructure, own the GPUs, own the TPUs, and own the power.
Savings are not going straight to shareholders. I think in most cases, I think they’re actually going and being reinvested in other parts of the business, both to create new products to generate demand, so just pure demand generation, going and finding new customers globally. You still have an entire consumer group that is largely untouched in a lot of parts of the world.”
Looking ahead, Dolen suggests the basis of corporate value may shift from software licensing to compute ownership.
“If you look out 10 years, perhaps the new form of capital, the new form of monetization of everything is not necessarily what’s the amount of software license income that you have, but it’s how much of the compute do you own and how much runs through your infrastructure?”
Dolen’s comments echo the view of the New York-based research firm Citrini Research, which laid out a scenario where hyperscaler CapEx is replaced by operational expenses (OpEx). According to Citrini, firms spending $100 million on employees and $5 million on AI today will likely spend $70 million on employees and $20 million on AI by 2028.
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