For years, the conventional wisdom was that the future belonged to knowledge workers. “Just learn to code” was the dismissive advice to blue collar workers who faced pressures from automation and globalisation. Who knows? Perhaps it is the coders who will need the career pivot first. This week’s chart tracks the relative performance of software stocks versus the S&P 500 since ChatGPT’s launch in late November 2022, alongside industrials relative to software. The story it tells is a striking reversal. Software initially surged, riding the AI hype wave to outperform the broader market by over 30%. But since mid-2024, the trade has violently unwound. Software has given back nearly all of its post-ChatGPT outperformance, while industrials, the quintessential ‘brawn’ sector, have soared, more than closing the gap that had persisted for over two years. It remains early, but the market may be quietly pricing in the impact that artificial intelligence (AI) will have on the labour market: specifically, that it may not complement cognitive work so much as replace it. What AI cannot yet do is fix a pipe or wire a building. The moat around physical, skilled labour is looking a lot wider than the moat around a lot of white-collar work. That is, until the robots arrive.