White-collar layoffs are ticking up, especially in tech, media, and back-office finance roles. Outplacement and career transition firm Challenger, Gray & Christmas reports nearly 75,000 tech layoffs in the first five months of 2025, with AI/AI implementation cited in nearly 20,000 of those. 

That figure already surpasses the 12,700 AI-attributed cuts recorded for all of 2024—marking a significant acceleration in AI-driven workforce reductions as companies shift from experimentation to full-scale deployment.

Source: Challenger, Gray & Christmas

Firms such as Klarna and Salesforce say AI now handles 30-50% of tasks once done by humans. Yet despite dire forecasts—Anthropic’s CEO recently said half of all entry-level office jobs could vanish within five years—unemployment remains low, and many firms are using AI to augment, not replace, staff.

One ripple effect is in commercial real estate: Cities such as San Francisco have office vacancy rates topping 35%, driven by a mix of remote work and layoffs. But AI is also creating new demand—AI firms leased 500,000 square feet in SF alone in early 2025, a rare growth pocket in a struggling sector.

Financial markets, however, have already priced in near-limitless upside. AI-driven enthusiasm has propelled tech giants—especially Nvidia, now worth $4 trillion—to historic highs. In 2023 and 2024, a handful of AI-linked names accounted for most of the S&P 500’s gains. As of mid-2025, investors remain bullish despite mounting evidence that broad economic gains lag behind stock valuations.

For RIAs, this poses a quandary. 

Sure, the productivity potential is real: McKinsey estimates AI could add $4.4 trillion to global GDP annually. But the path is uneven. Early benefits accrue to a narrow set of firms; broader disruption (and return) may take years.

Takeaway: RIAs can help clients separate AI exposure from AI exuberance—identifying companies with durable AI moats, and watching for ripple effects in sectors such as CRE, staffing, and infrastructure.

“With earnings season underway, the language CEOs use around tariffs and guidance will be just as important as the numbers themselves.” 

一 Craig O’Neill, Chief Executive Officer

"We’re also keeping a close eye on the rate cycle and how that might impact positioning going forward.”

一 Alexander D. Oxenham, CFA®, Partner & CIO

Active management is crucial in the small and mid-cap space, where companies often rely on unproven business models and face funding challenges. Active management can uncover these risks and opportunities. 

“Catastrophe bond” issuance has surged to record levels in 2025 as insurers seek to offload growing climate-related risks. 

With strong investor demand and the launch of the first cat bond ETF, this once-niche asset class is moving into the mainstream, offering yield, diversification, and a window into the future of risk transfer.

Source: The Federal Reserve Bank of St. Louis.