McDonald’s Goes Gold With New AI
“Would you like fries with that?”
You’ve likely heard this phrase as a joke, usually directed at the career prospects of liberal arts graduates. While its current use has become quite derogatory in casual conversations, its origins are the source of the early upsell success of cashiers in the fast food industry.
But these low-paying fast food jobs are about to disappear. McDonald’s Corp. (NYSE: MCD) announced it was replacing cashiers at 2,500 restaurants with kiosks, relegating “Would you like fries with that?” at the push of a button on a digital touch screen.
It was the latest salvo in an increasingly narrow job market, slowly dominated by robots and artificial intelligence (AI).
For investors, the AI revolution represents an opportunity. For job seekers, on the other hand, a liberal arts degree is finally beginning to seem like a solid option.
An automatic investment
As we see with McDonald’s, the move toward automation is an attractive prospect for investors. ATMs reduce labor costs, improve accuracy, and eliminate human error from point of sale operations. The move, while representing a fraction of McDonald’s locations, was enough to prompt Cowen analysts to raise their target price on MCD shares to $ 180 per share and issue a “superior performance” rating.
“Our analysis suggests that the efforts should pay off in 2018,” Cowen analyst Andrew Charles told CNBC. Charles raised his 2018 growth estimate, citing plans for McDonald’s to roll out kiosks to all 14,000 U.S. locations by the end of the year.
Shares in MCD hit an all-time high on the news, and while stocks are likely to consolidate those gains as investors take in McDonald’s plans, the investment outlook remains impressive as the company moves down the path toward automation.
But McDonald’s is not the first company to embrace AI and robotic automation. Amazon has pretty much made it a way of life, and is even flirting with the idea of drone hive warehouses for automated order picking, packing, and delivery.
Tesla is a pioneer in autonomous vehicles and is even planning a semi-trailer for automated shipping, a move that is gaining considerable traction and could also cut costs for many companies. And both Advanced Micro Devices and Nvidia are market leaders in developing AI logic chips and accompanying software.
A brave new job market
The other side of the coin of automation is employment … or rather the lack of it. The irony of automation is that while many jobs are on the brink of extinction, such as fast food cashiers and the 1.7 million truck drivers in the US, there is a skill set that AI you have yet to decipher: personal judgment, critical thinking, and creativity. … you know, human being.
According to billionaire businessman Mark Cuban, a liberal arts degree teaches this skill set and will be in increasing demand in the new autonomous economy. “Know how to think and critically evaluate [situations] from a global perspective, I think, it’s going to be more valuable than what we see today as exciting careers, which could be programming or [accounting], or that sort of thing, “Cuban told attendees at the South by Southwest conference.
The bottom line is that the economy is in the early stages of the transition to automation. Universal Basic Income isn’t going to save us from a near-jobless future, but investing in companies that lead the way in AI and automation is good advice. As you prepare for a future where “Would you like fries with that?” it’s a thing of the past.