Episode summary
The Two Biggest Stories of the Year: AI & Tariffs
Animal Spirits
· · Hosts: Michael Batnick, Ben Carlson · Guests: Ara Kharazian
Summary
Ara Kharazian argued that the best way to judge the AI boom is by looking at what businesses are actually spending, not just public-market narratives. Using Ramp payment data, he said AI adoption is broader than the government’s 9% estimate, with about 44% of companies on Ramp showing some significant AI contract and retention rising to 80% in 2024 from about 50% in 2022. He expects AI adoption to keep rising, though he thinks the most visible near-term gains are showing up in software engineering, customer service, and back-office workflows rather than in every industry at once.
He also pushed back on the idea that AI is necessarily a bubble because companies are buying the products and many vendors are revenue-generating. At the same time, he said some smaller businesses will use AI mainly for marketing or admin work, while larger firms with dedicated tech teams are better positioned to integrate it deeply. On labor, he was not an AI doomer, arguing most US jobs are still not directly exposed and that any job displacement so far appears narrow.
The second major theme was tariffs. Kharazian said tariff effects are filtering through much more slowly than headlines suggest, with tariff-related transactions still only around 3% of invoices in Ramp data. He argued the lag comes from legal, operational, and supply-chain frictions, plus firms shifting production to lower-tariff countries rather than immediately reshoring.
Key takeaways
- Ara Kharazian said Ramp data shows AI adoption at about 44%, far above the government’s 9% survey estimate.
- He said AI product retention has risen to 80% in 2024 from about 50% in 2022, suggesting usage is sticking.
- Kharazian argued the biggest near-term AI gains are in software engineering, customer service, and finance operations, not necessarily consumer-facing products.
- He said tariff pass-through has been slower than expected, with tariff-related transactions still only about 3% of invoices in Ramp data.
- Kharazian expects AI adoption to keep rising over time, but said the market is still early and many buyers do not yet understand the leading vendors.
Notable quotes
“when we're talking about whether or not something is a bubble, I feel like people are grasping for all the different data sets that they can possibly use”
“Retention of AI products is higher, 80% now in 2024, about 50% in 2022”
“the government is likely under reporting the level of AI adoption actually happening”
“I do think AI adoption is going to increase to the point that we're at 100% adoption across businesses”
“Price increases haven't happened to the nearly the same extent as we'd expect specifically because a lot of companies haven't started paying these tariffs yet in a meaningful way”
How the episode opens
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Welcome to Animal Spirits with Michael and Ben. Today we are joined by Ara Carzian who is an economist at RAMP. He writes a substack called Ramp Economics Lab.
Fascinating stuff. They sent us some of their work, some of their some of their charts, and we said, "Okay, we got to talk to this guy. Uh, it's really interesting stuff.
You might be familiar with RAMP and you're not sure why. The Saquon Barkley is doing commercials with them, unfortunately, which is neither here nor there. Um they uh they are the fast I think they're the fastest fintech company to reach a billion dollars in annualized revenue and they are doing so.
How? Because essentially what their business is is making expense reporting, automating business and all the annoying stuff that business don't want to deal with. Receipt upload, credit card track, whatever it is, they do that and obviously they do it really well.
So what that gives them is the insight and the actual data to look through to their customers on where they're spending money.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai usage
- tariffs
- corporate finance
- company financials
- macroeconomic uncertainty
Companies and tickers mentioned
- Ramp
Watch the episode
Watch “The Two Biggest Stories of the Year: AI & Tariffs” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Animal Spirits, this episode and its artwork belong to The Compound. Octagon is not affiliated with the show; this page is an independent summary.
