We've suspected for a while that companies were going to eventually lay off workers where artificial intelligence could do the job. Amazon just made clear that it could happen sooner than later on a broader scale.
In a recent message to employees, CEO Andy Jassy acknowledged that the company expects to reduce its workforce over time as AI reshapes and revolutionizes the way that work gets done. To be clear, it wasn’t framed as an imminent layoff or major restructuring. Instead, it's likely to be a long-term evolution as AI continues to develop.
For years, Amazon has been well-known for its huge workforce. Whether it's delivery drivers, warehouse workers or cloud engineers, the company has scaled rapidly to keep up with its ever expanding lines of business. Now, as AI tools mature and become more sophisticated, Amazon is signaling something entirely different. It's looking to develop a leaner and more efficient structure that does more with fewer people.
From a business standpoint, the move makes sense. Amazon already uses AI extensively, whether it’s for customer service chatbots, warehouse logistics, corporate forecasts or ad targeting. Jassy says that over 1,000 generative AI applications are either live or in development across the company. That kind of development doesn’t just increase productivity. It can change the entire structure of the company.
When making an investment case for the stock, we feel it's a positive development. On the surface, it should be good for margins. Cutting costs, particularly in headcount, can help to boost profitability, especially in environments where economic growth becomes slower and more challenging to achieve. Margins have been a particular focus for investors in evaluating Amazon and any step towards improved operational efficiency is likely to be a good thing. If Amazon can produce more with fewer resources, financial health should improve.
It does, however, raise some longer-term questions. Amazon has long built its brand on being a relentless innovator with massive scale. As teams get smaller and more dependent on AI and automation, can it maintain that same pace of experimentation and innovation? What happens to employee morale as the employee count gets reduced and jobs are vulnerable?
Amazon is already one of the largest employers in the country. When it starts talking about reducing headcount due to AI, it likely signals that other big tech companies may not be far behind. That doesn’t necessarily mean a complete collapse in the job market is imminent, but it does suggest that the look of the labor force, especially white collar jobs, is going to change over the next few years.
For consumers, the impact may be more subtle (or even positive). Improvements in AI efficiency could mean faster delivery time, more personalized shopping experiences and smoother customer service. It could also lead to less human touch. Amazon will need to find a healthy balance between improving corporate efficiency and not alienating existing employees in the process.
Overall, we feel that Amazon’s announcement signals where the company and the labor market, in general, is heading. For investors, reducing costs and improving efficiency could help the stock. For workers and the broader economy, it’s another reminder that the age of AI is already here.
An investor should consider the investment objectives, risks, charges and expenses of the Funds (or of the investment company) carefully before investing. To obtain a prospectus containing this and other information, please call 1-844-476-8747. Read the prospectus carefully before you invest.
Important Information
Investors should consider the investment objectives, risks, charges and expenses of the GraniteShares funds (the “Funds”) carefully before investing. For a prospectus or summary prospectus with this and other information about the Funds, please call (844) 476 8747, or visit the website at www.graniteshares.com. Read the prospectus or summary prospectus carefully before investing.
To obtain a prospectus for the leveraged single stock ETFs, please visit https://graniteshares.com/media/cqjkgmvf/graniteshares-etf-trust-s-l-single-stock-etfs-prospectus.pdf
Except as described above regarding the liquidation of the ETFs, shares of the Funds may be sold during trading hours on the exchange through any brokerage account, shares are not individually redeemable, and shares may only be redeemed directly from a Fund by Authorized Participants. There can be no assurance that an active trading market for shares in a Fund will develop or be maintained. Shares may trade above or below NAV. Brokerage commissions will apply.
Fund Risks
Multiple funds have a limited operating history of less than a year and risks associated with a new fund.
The Leveraged and Daily Inverse Funds are not suitable for all investors. The investment program of the funds is speculative, entails substantial risks and include asset classes and investment techniques not employed by most ETFs and mutual funds. Investments in the ETFs are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund is designed to be utilized only by knowledgeable investors who understand the potential consequences of seeking daily leveraged (2X) or daily inverse (-1X and -2X) investment results, understand the risks associated with the use of leverage and are willing to monitor their portfolios frequently. For periods longer than a single day, the Fund will lose money if the Underlying Stock’s performance is flat, and it is possible that the Fund will lose money even if the Underlying Stock’s performance increases over a period longer than a single day. An investor could lose the full principal value of his/her investment within a single day. The funds do not directly invest in the underlying stock.
The Funds seek daily inverse or leveraged investment results and are intended to be used as short-term trading vehicles. Each Fund with “Long” in its name attempts to provide daily investment results that correspond to the respective long leveraged multiple of the performance of an underlying stock (each a Leveraged Long Fund). Each Fund with “Short” in its name attempts to provide daily investment results that correspond to the inverse (or opposite) multiple of the performance of an underlying stock (each an Inverse Fund).
Investors should note that the Long Leveraged Funds and the Daily Inverse Funds pursue daily leveraged investment objectives and daily inverse investment objectives (respectively), which means that the fund is riskier than alternatives that do not use leverage and inverse strategies because the fund magnifies the performance of their underlying security. The volatility of the underlying security may affect a Funds' return as much as, or more than, the return of the underlying security.
For the Leveraged Long Funds because of daily rebalancing and the compounding of each day’s return over time, the return of the Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from 200% of the return of the Underlying Stock over the same period. The Fund will lose money if the Underlying Stock’s performance is flat over time, and as a result of daily rebalancing, the Underlying Stock volatility and the effects of compounding, it is even possible that the Fund will lose money over time while the Underlying Stock’s performance increases over a period longer than a single day.
For the Daily Inverse Funds because of daily rebalancing and the compounding of each day’s return over time, the return of the Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from -100% and 200% of the return of the Underlying Stock over the same period. The Fund will lose money if the Underlying Stock’s performance is flat over time, and as a result of daily rebalancing, the Underlying Stock volatility and the effects of compounding, it is even possible that the Fund will lose money over time while the Underlying Stock’s performance decreases over a period longer than a single day.
Shares are bought and sold at market price (not NAV) and are not individually redeemed from the ETF. There can be no guarantee that an active trading market for ETF shares will develop or be maintained, or that their listing will continue or remain unchanged. Buying or selling ETF shares on an exchange may require the payment of brokerage commissions and frequent trading may incur brokerage costs that detract significantly from investment returns.
An investment in the Fund involves risk, including the possible loss of principal. The Fund is non-diversified and includes risks associated with the Fund concentrating its investments in a particular industry, sector, or geographic region which can result in increased volatility. The use of derivatives such as futures contracts and swaps are subject to market risks that may cause their price to fluctuate over time. Risks of the Fund include Effects of Compounding and Market Volatility Risk, Inverse Risk, Market Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Daily Index Correlation Risk, Other Investment Companies (including ETFs) Risk, and risks specific to the securities of the Underlying Stock and the sector in which it operates. These and other risks can be found in the prospectus.
Investing in physical commodities, including through commodity-linked derivative instruments such as Commodity Futures, Commodity Swaps, as well as other commodity-linked instruments, is speculative and can be extremely volatile and may not be suitable for all investors. Market prices of commodities may fluctuate rapidly based on numerous factors, including: changes in supply and demand relationships (whether actual, perceived, anticipated, unanticipated or unrealized); weather; agriculture; trade; domestic and foreign political and economic events and policies; diseases; pestilence; technological developments; currency exchange rate fluctuations; and monetary and other governmental policies, action and inaction.
A liquid secondary market may not exist for the types of commodity-linked derivative instruments the Fund buys, which may make it difficult for the Fund to sell them at an acceptable price. The Fund is new with no operating history. As a result, there can be no assurance that the Fund will grow to or maintain an economically viable size, in which case it could ultimately liquidate.
Derivatives may be more sensitive to changes in market conditions and may amplify risks and losses.
This information is not an offer to sell or a solicitation of an offer to buy shares of any Funds to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Please consult your tax advisor about the tax consequences of an investment in Fund shares, including the possible application of foreign, state, and local tax laws. You could lose money by investing in the ETFs. There can be no assurance that the investment objective of the Funds will be achieved. None of the Funds should be relied upon as a complete investment program.
The Fund is distributed by ALPS Distributors, Inc, which is not affiliated with GraniteShares or any of its affiliates ©2024 GraniteShares Inc. All rights reserved. GraniteShares, GraniteShares Trusts, and the GraniteShares logo are registered and unregistered trademarks of GraniteShares Inc., in the United States and elsewhere. All other marks are the property of their respective owners.
ETF distributed by ALPS Distributors, Inc. (ADI)
Control GRS001355