Remember when fuel injection systems rendered carburettors in cars obsolete, movie streaming-on-demand forced video rental stores to close their doors virtually overnight, or what digital technology did to analogue businesses? At the company level, remember what digital photography did to the likes of Kodak?
The industrial revolution is riddled with countless similar examples of how ‘disrupting technology’ created a continuum of wrecking balls for business.
Skip forward to 2025, and despite the myriad time-saving benefits it affords humanity, artificial intelligence (AI) is being framed as either bogeyman or saviour for companies.
Whatever we know or don’t know about AI, not all stocks will rise on its incoming tide.
While AI will spur the creation of new entities, it could also undermine the core earnings of some of the existing businesses you’re invested in, potentially marginalise a previous competitive advantage and in some cases lead to an existential business threat.
There is no shortage of examples within our relatively recent past of technological innovation being a cruel mistress to business, and when it comes to AI, it’s the ripple effect that will continue to reshape the share market.
AI – both exciting and frightening
While he’s been a long-term investor in mega-tech stocks like Microsoft and Alphabet during his time as global fund manager, co-founder of Magellan Hamish Douglass – currently a private investor – is now a lot more circumspect about the road ahead for investors in the wake of AI.
“Now is the most exciting and the most frightening time to be an investor in my lifetime,” commented Douglass who now questions the unbridled chipper sentiment of those who believe AI can do no wrong.
What most investors are yet factor in, adds Douglass, is what could happen to share markets if AI is allowed to progress without the necessary regulation protection.
Douglass foresees half the ASX index (or any index for that matter) could virtually collapse by 50, 60 or 70% in share price in the next five to 10 years due to businesses becoming so disrupted.
He also foresees mass joblessness and an unprecedented slump in demand.
“AI is going to be hugely disruptive, but it’s not going to become apparent for about five years,” Douglass notes.
“Working out ahead of the rest of the market, which companies will be the winners and the losers is more important today than it’s ever been.” he said.
Sectors most at risk
While Douglass flags advertising, entertainment, accounting, law, property, property valuations, and consulting among those sectors directly exposed to AI, his own [former] profession, funds management, is also no exception, given that AI can do the work of analysts, yet cheaper and faster.
Douglass wouldn’t be surprised if up to 70% of today’s high-paying jobs started disappearing within five to 10 years.
“When 20, 30 or 40% of the professional workforce around the world don’t have jobs, who’s going to be spending $6,000 on a handbag?” ponders Douglass, who expects variations of this conundrum to undermine most sectors.
“As you accelerate this over time, businesses you think are wonderful today, you start saying to yourself, ‘what happens if the customers don’t have the money?'”
Douglass also reminds investors that the flow-on effect of mass job cuts not only means dwindling consumer demand but declining taxation revenue and ballooning budget deficits as benefit claims surge.
White-collars fading
What’s evident from mass lay-offs by members of the so-called Magnificent Seven, like Amazon, Meta and Intel, and others, is that white-collar jobs are waning.
Meta, the brainchild of Mark Zuckerberg, with platforms such as Facebook, Instagram, WhatsApp, and Messenger, has already talked about replacing 90% of staff performing their privacy and integrity reviews.
Then there’s Microsoft, which produces a swath of video game content and runs platforms such as LinkedIn, Skype, and Mojang, which recently announced it will be slashing up to 9,000 jobs to invest more heavily into AI.
Here in Australia, CEOs have no illusions about opportunities AI presents to slash labour costs, with Telstra (ASX: TLS), Wisetech (ASX: WTC), CSL (ASX: CSL), ASX (ASX:ASX), and Commonwealth (ASX: CBA) among listed large cap stocks to have already flagged mass sackings.
“Some of the large tech executives are out there publicly saying, ‘Oh, well jobs are always to be found’. But that’s not what they’re saying privately. In private, they’re saying, ‘these jobs are gone forever,’” Douglass noted.
Stocks in the crosshairs of AI
Given that AI both 'giveth and taketh away’, your job as an investor in listed stocks is to work out if companies are net casualties or net beneficiaries of AI overall.
Infrastructure stocks, like Transurban (ASX: TCL), APA Group (ASX: APA) and Atlas Arteria (ASX: ALX) appear to have a built-in immunity to the AI onslaught.
At face value, consumer staples like Coles (ASX: COL) and Woolworths (ASX: WOW) also look somewhat incubated from AI, after all people have to eat.
However, these two stocks are also falling into line with new-age tech at the expense of their workers.
For you, the investor, that’s probably attributable to lower operating costs and higher earnings.
These two supermarket giants have recently announced trials of their “digital revolution” in the form of the Coles Smart Trolley and Woolworths Scan&Go Trolley, allowing customers to use a small tablet to scan and bag items as they go, display in-store specials and “product aisle locations”.
Six stocks that look primed to benefit from AI
Weebit Nano (ASX: WBT): Weebit Nano is an emerging semiconductor player developing next-generation memory technology known as ReRAM (Resistive RAM).
ReRAM has potential advantages over traditional flash memory, offering faster speeds, lower power usage, and better endurance – all crucial for AI and edge computing devices.
As AI models grow larger and more energy-hungry, efficient memory solutions are becoming increasingly important.
In 2025, Weebit achieved a major milestone by signing a commercial production agreement with a global foundry, marking a step forward from R&D to potential mass adoption.
While still early in its commercial journey, Weebit’s unique technology positions it at the intersection of AI, hardware innovation, and energy efficiency.
Appen (ASX: APX): This small-cap global market leader in data for the AI Lifecycle is shaping up as a standout in the AI sector, renowned for its leadership in data services, particularly in machine learning and AI training data.
Due to the rising demand for reliable AI data solutions, this Australian AI stock appears to have significant growth potential, especially as the need for advanced data services continues to climb.
BrainChip Holdings Ltd (ASX: BRN): The company’s cutting-edge AI chips mimic the human brain, enabling faster and more efficient processing for complex AI-powered tasks.
This breakthrough technology is driving innovation in areas such as autonomous vehicles, smart sensors, and cybersecurity.
NextDC (ASX: NXT): Is a leader in data centre infrastructure, a vital component for powering AI and cloud computing applications.
The company’s state-of-the-art facilities support the growing demand for data processing and storage, which are essential for AI advancements.
As a result, the company is considered one of the best AI stocks ASX investors should consider, especially those looking to capitalise on the increasing integration of AI in cloud services and data analytics.
Megaport Ltd (ASX: MP1): Megaport is a global network-as-a-service provider that facilitates flexible, on-demand connectivity between data centres and cloud services.
Its elastic, software-defined network allows businesses to scale bandwidth dynamically – an essential feature as AI workloads spike and evolve in real time. The company operates across 25 countries and serves enterprise clients with mission-critical connectivity needs.
Megaport’s recent earnings update showed continued revenue growth, driven by demand for cloud interconnection and AI-adjacent services.
The firm has been expanding its partnerships with major cloud providers like Microsoft Azure, Google Cloud, and AWS, reinforcing its centrality in the digital transformation ecosystem.
NUIX (ASX: NXL): NUIX develops advanced data analytics and investigation software, used by governments, regulators, and enterprises to extract insights from massive volumes of unstructured data.
While it’s not a pure AI play, its use of machine learning to automate forensic and compliance tasks places it firmly in the AI-adjacent category.
The company has undergone a transformation over the past year, stabilising its leadership and improving revenue consistency after a turbulent post-IPO period.
In 2025, NUIX launched an AI-enhanced version of its flagship platform, incorporating more sophisticated automation and natural language processing capabilities.
With growing demand for data governance and cybersecurity tools powered by AI, NUIX could see renewed interest from investors seeking a tech turnaround story with real-world utility.
Four stocks that look exposed to the AI onslaught
Acumentis (ASX: ACU) formerly Landmark White Limited: The valuation business looks acutely exposed to AI given that a significant number of valuations in the residential sector are already being conducted without the direct involvement on an on-site valuer.
Unless the sector can value-add through greater valuer intervention, the company’s prospects don’t look good.
Kelly Partners (ASX:KPG): Kelly Partners, an accounting firm providing specialist accounting, tax, business advisory, private wealth and financial advice, looks to be under threat from operations like which has not only displaced traditional accountants, but helped them do their job better.
AMP (ASX:AMP): While the adviser’s platform North, it has deployed a ‘first in market’ generative AI-powered feature that automatically transcribes and organises client meeting notes, this may not be sufficient to survive the onset of AI.
Freelancer (ASX:FLN): Freelancer’s flagship platform has a workforce of over 70 million users and 2,700 skills.
The company is integrating artificial intelligence into its platform, and some of its workers have artificial intelligence skills.
However, it remains unclear whether or not people will go out of their way to pay for things they may be able to get for free, or whether investors will finally embrace this stock.
