AI automates the entry-level "grunt work" that traditionally formed the base of the corporate pyramid. This transforms organizations into diamond shapes, with fewer junior roles. This poses a new challenge: junior hires may know AI tools but lack the wisdom and judgment gained from that foundational experience.

By replacing the foundational, detail-oriented work of junior analysts, AI prevents them from gaining the hands-on experience needed to build sophisticated mental models. This will lead to a future shortage of senior leaders with the deep judgment that only comes from being "in the weeds."

The primary impact of AI in investment banking isn't headcount reduction but a massive productivity lift. By automating 80% of the work for initial drafts of pitch decks and models, AI frees up senior bankers' bandwidth. This allows them to pursue a greater number of new engagements, fundamentally expanding the firm's capacity for new business.

The traditional law firm model relies on a large base of junior associates for grunt work. As AI automates these tasks, the need for a large entry-level class shrinks, while mid-career lawyers who can effectively leverage AI become more valuable, morphing the firm's structure into a diamond shape.

AI will make the production of investment memos and rote analysis functionally free. The role of an investment analyst will therefore evolve from creating this content to prompting, steering, and quality-assuring the output of AI agents. The job becomes about evaluation and verification, not initial generation.

The "pyramid replacement" theory posits that AI will first make junior analyst and other entry-level positions obsolete. As AI becomes more agentic, it will climb the corporate ladder, systematically replacing roles from the base of the pyramid upwards.

Tasks like writing complex SQL queries or building simple dashboards, once the training ground for new hires, are now easily automated by AI. This removes the "first step on the ladder" for junior talent and evaporates the economic rationale for hiring large groups of trainees.

The future of financial analysis isn't job replacement but radical augmentation. An analyst's role will shift to managing dozens of AI agents that perform research and modeling around the clock, dramatically increasing the scope and speed of idea generation and validation.

The immediate threat of AI is to entry-level white-collar jobs, not senior roles. Senior staff can now use AI to perform the "grunt work" of research and drafting previously assigned to apprentices. This automates the traditional career ladder, making it harder for new talent to enter professions like law, finance, and consulting.