The "next phase" of AI might be good news for undergraduate quants
Many of the worlds top hedge funds have been building out their applied AI teams and created generative AI tools for their traders and engineers. Eric Schmidt, ex-CEO of Google, says Gen AI is advancing too fast for them to keep up.
In a talk at hedge fund Citadel, Schmidt said "even this group may not appreciate how fast [AI's growth] is going to happen over the next five years." He said AI bots like ChatGPT and Claude have already mastered the semantics of language, and are close to cracking "huge context windows, agents, and the ability to do text to program."
Schmidt said agents are "the next phase." These, in case you're not aware, are generative AI bots specialised for specific tasks, rather than generalist bots like ChatGPT. Copilots, used by funds today for tasks like coding, are a part of a subsection called 'writer agents;' these work alongside the human, but more advanced AI agents should be able to automate tasks entirely. SigTech, a spinoff of Brevan Howard's systematic investments group, is for example, working on a 'debate-driven agent' system, in which various specialized agents interact with each other to evaluate the robustness of an action.
Schmidt says that AI is already able to operate at "80-90% of the level of a PhD student" in areas like chemistry and physics, and that this 20% gap may be closing very soon. OpenAI CEO Sam Altman is thought to be meeting members of the newly inaugurated Trump administration to discuss PhD level AI "super-agents."
These PhD agents might give hedge funds cause to consider whether they need PhDs. At the moment, funds are thought to be quite snobby and prioritize hiring PhDs, while prop trading firms tend to prefer undergraduates.
Schmidt says the current biggest limiting factors for AI are "chips, energy and infrastructure." Alex Gerko's XTX Markets has 20,000 GPUs and is spending $1bn on Finnish data centres to support its AI infrastructure, while secretive AI trading firm Quadrature Capital is also thought to have its own GPU stockpile.
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