The AI Shift: From Builders to Users – The Next Economic Revolution

Joseph H. Davis, Chief Investment Officer at Vanguard, states that the economy is transitioning from an investment phase dominated by AI builders to a phase where AI users will capture the primary rewards, according to a June 25, 2026, analysis published by Project Syndicate. Davis argues that if artificial intelligence fundamentally transforms the economy as promised, the greatest financial gains will shift toward the entities that apply the technology to increase productivity rather than those that create the underlying tools.

This shift mirrors the historical trajectory of general-purpose technologies. Davis notes that every time a foundational innovation emerges, the initial period of growth favors the providers of the new infrastructure before the benefits migrate to the broader economy.

Why are AI rewards shifting to users?

The current economic phase is characterized by heavy investment in AI builders. These companies develop the large language models and the specialized hardware, such as GPUs, required to run them. However, Davis suggests this phase is a precursor to a broader deployment stage.

In the subsequent phase, the “users”—companies across diverse sectors like healthcare, finance, and manufacturing—will integrate these tools into their core operations. The value then moves from the cost of the software to the efficiency gained by its application.

This transition occurs when the technology becomes a commodity. Once AI tools are widely available and standardized, the competitive advantage no longer comes from having access to the AI, but from how effectively a business uses it to lower costs or create new products.

How does AI compare to previous general-purpose technologies?

Davis frames AI as a general-purpose technology, a category of innovation that disrupts entire economies and changes how labor is organized. This category includes historical precedents such as the steam engine and electricity.

When electricity was first introduced, the primary beneficiaries were the companies building power plants and transmission lines. The real economic boom, however, happened later when factories redesigned their layouts to use electric motors instead of a single central steam engine. This shift in the “user” phase led to massive productivity growth because it allowed for more efficient assembly lines and new manufacturing processes.

Davis suggests AI will follow a similar path. The current dominance of AI builders is the equivalent of the early power plant era. The next stage involves the reorganization of business workflows to maximize the utility of AI.

What is the impact on labor and productivity?

The transition to a user-dominated reward system depends on how AI affects the workforce. Davis identifies two primary mechanisms: automation and augmentation.

Automation involves AI replacing human tasks entirely, which can reduce labor costs for the user. Augmentation occurs when AI enhances a worker’s ability to perform tasks, increasing the total output per hour of labor.

According to the analysis, productivity growth in the AI era will not come from the existence of the software alone, but from the successful augmentation of labor. When users find ways to combine human expertise with AI speed, they capture the “reward” mentioned by Davis.

This creates a divergence in outcomes. Companies that merely purchase AI tools without changing their internal processes may see little gain. Conversely, firms that fundamentally restructure their labor models to integrate AI will likely see the highest returns on investment.

“If AI delivers as promised and fundamentally transforms the economy, we will have moved from the current investment phase, where AI builders dominate, to one where AI users will reap the greatest reward.”Joseph H. Davis, Project Syndicate

The ultimate distribution of wealth in an AI-supercharged economy will depend on whether these productivity gains are shared with labor or captured entirely by the owners of the capital. Davis indicates that this dynamic is a recurring theme in the adoption of all general-purpose technologies.