How do recent advances in Generative AI affect firm value? We construct the first measure of firms’ workforce exposures to Generative AI and show that an “Artificial-Minus-Human” (AMH) portfolio that is long high-exposure firms and short low-exposure firms earned daily returns of 0.44% in the two weeks following the release of ChatGPT.

The labor-exposure effect is more pronounced for firms with greater data assets and is distinct from the effect of firms’ product exposures to Generative AI. Highly-exposed workforces can be either substituted for or complemented by Generative AI technologies. We measure whether the exposed tasks are core or supplemental to assess relative substitutability. Examining firms’ labor demand and profitability following the release of ChatGPT supports a labor-technology substitution channel for the increases in exposed firms’ values that we document.