Prediction: AI Won't Cause Many Lost Jobs. That's Good News for These 2 ETFs.

One cause for worry about the artificial intelligence (AI) boom is the question of whether AI will take all the jobs. What if new AI tools become so powerful that they can replace massive numbers of people in the workforce? Could AI lead to a future of widespread unemployment, while just a few major tech companies make all the money with no humans required?

There has been a lot of alarmism and overly confident pronouncements from certain AI company executives about AI killing jobs, but the latest data disagrees. AI doesn't seem to be taking away many jobs. The future of human employment might be brighter than AI doomsayers believe.

Let's look at the landscape of AI's impact on jobs -- and why two exchange-traded funds (ETFs) might be good investments today.

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Vanguard: AI is not leading to lost jobs

Vanguard's research points out that nearly four years after the launch of ChatGPT in 2022, "occupations with the greatest exposure to AI have not experienced widespread employment declines." The Vanguard analysis says that AI seems to be acting more like automated teller machines (ATMs), which didn't replace many jobs for humans at banks, than like mobile banking, which eventually replaced many jobs.

Instead of AI taking all the jobs, Vanguard is bullish on AI as a general-purpose technology that can supplement and expand the power of human labor. It's possible that AI will boost productivity and create new types of jobs for people, rather than kill jobs and replace humans in large numbers.

What does this mean for your investments? Other Vanguard research projects that adoption of AI technology will drive widespread productivity gains in the broader economy. Instead of AI killing jobs, AI might help all kinds of companies make more money (and hire more people) -- not just major tech companies.

As part of this AI-driven shift in productivity and profits, Vanguard's 10-year forecast says that U.S. value stocks, U.S. small-cap stocks, and developed-market international stocks could outperform the overall U.S. stock market over the next 10 years.

Here are two ETFs for value stocks and global stocks that fit this investment strategy.

Vanguard Morningstar Small-Cap Value ETF: 840 stocks, 3 years of 14.3% annualized returns

The Vanguard Morningstar Small-Cap Value ETF (NYSEMKT: VBR) could be a big winner from the future of AI. It offers a diversified portfolio of 840 small-cap value stocks in less tech-intensive industries. The fund's top holdings by industry sector are:

• Industrials: 20.8% of the fund
• Financials: 18.1%
• Consumer discretionary: 14.6%
• Real estate: 10.2%
• Technology: 8.5%

Many of these sectors have been overlooked and underrated during the recent AI boom, as investors have crowded into AI and semiconductor stocks. But if Vanguard's analysis is correct and the AI profit boom will be widely shared, these value and small-cap stocks might be poised to grow faster than the rest of the U.S. stock market.

The Vanguard Morningstar Small-Cap Value ETF has delivered 14.3% annualized returns over the past three years, and a past-year return of 25.75% by net asset value. It charges a low expense ratio of 0.05%.

State Street SPDR Portfolio Developed World ex-US ETF: 2,436 stocks, 3 years of 17.9% annualized returns

Vanguard projects that developed markets outside the U.S. will outperform U.S. stocks over the next 10 years. That means the State Street SPDR Portfolio Developed World ex-US ETF (NYSEMKT: SPDW) could be a good choice today for long-term investors. This fund holds a broadly diversified portfolio of 2,436 international stocks from 25 countries.

The top five developed market economies represented in this global ETF are:

• Japan: 21.9% of the fund
• United Kingdom: 11.35%
• Canada: 10.7%
• South Korea: 7.8%
• France: 7.2%

Since this fund includes South Korea as a developed market (not an emerging market), some of its top holdings are major South Korean AI chip stocks, such as Samsung Electronics (2.3% of the fund) and SK Hynix (1.7%). The ETF's top 10 stock holdings also include British and Canadian banks, Swiss pharmaceutical stocks, and global energy giant Shell PLC.

The State Street SPDR Portfolio Developed World ex-US ETF has delivered annualized returns(by net asset value) of about 17.9% over the past three years, and 29.55% over the past year. It charges an ultra-low expense ratio of 0.03%.

Why buy VBR or SPDW...or both?

If Vanguard's research is correct and AI is not killing jobs, that's good news for people, for the stock market, and the world. It means we can get big productivity gains from AI without lots of lost jobs.

And if AI really is a general purpose technology and a rising tide that lifts all boats, small-cap value stocks and international stocks in developed markets could be the most likely to benefit. These two ETFs could both be good buys for long-term investors today.

Ben Gran has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.