Betting on AI displacement

The World Economic Forum recently reported that AI is expected to displace (or entirely eliminate) roughly 83 million jobs globally by 2027. At the same time, 69 million new jobs are expected to emerge, representing a net loss of 14 million jobs by 2027.
As AI becomes more capable, the erasure of entry-level white-collar jobs is driving an increase in adult upskilling. Pair this with existing trade and technical jobs becoming more complex (for example, automotive technicians now needing to work on technologically advanced and electric vehicles), and trade schools stand to benefit. Four-year colleges and post-graduate programs (including Ivy League institutions) are already seeing declines in applicants and admissions — a trend likely to accelerate as AI capabilities continue to evolve.
Trade and technical jobs typically follow a cyclical pattern of popularity. This time, however, the cycle may be compounded: as trade and tech jobs increase pay to attract qualified candidates from a largely white-collar emerging workforce, retiring baby boomers and a shortage of apprentices are creating large gaps in many markets. Combine this with AI-driven displacement, and you have the perfect setup for a renaissance in trade schools.
Large hedge funds have already come to this conclusion. Recent 13F filings show significant purchases by several funds in various trade schools and corporations involved in reskilling and certificate programs.
$STRA, $LOPE, and $UTI are examples of companies poised to benefit from this trade and technical renaissance. Universal Technical Institute (UTI), in particular, appears well-positioned to capitalize. UTI CEO Jerome Grant has acknowledged that AI and automation will likely eliminate many traditional trade jobs. In response, the institute is updating its curriculum to prepare students for what they’ve dubbed “new collar” jobs. For example, UTI’s automotive mechanic courses now include instruction on electric vehicles and their computer systems. The school has also launched its North Star Strategy, which identifies market shortages and scales various programs to meet emerging demand.
At the time of writing, UTI is trading at $36.25 with a forward P/E of 33–40. With the industry average forward P/E sitting around ~20 and with significant hedge fund interest, it’s clear that we aren’t the only ones expecting UTI to see substantial future earnings growth.