Most companies using AI are just paying for a subscription. They aren't actually building LLMs or other machine learning applications that take over a known task. You could easily replace the term AI with just subscription.
When they say they are laying off workers, they are saying "we signed up for Cursor, and enabled some AI features on Jira and Salesforce"
The layoff is just an excuse until they realize that just because Jira can write a summary of the ticket, doesn't mean the ticket gets done any faster.
And keep in mind that while the company may care about its overall efficiency, its individual organs only care about their internal incentives. If the LLM gets the ticket out of someone's area of responsibility faster, why do they care if that makes it harder for someone else?
The "spending money on each other" part is untrue. It is mostly going in one direction, towards Nvidia, and that's the reason they crossed $5 Trillion in market cap recently.
The N was really Netflix originally when it was the poster child for AWS consumption before NVIDEA/AI was even in the conversation. But, yes, "Big Tech" is probably the best term these days to avoid debates about whether this company or that company really belongs in the category--especially given that certain companies have done very well in terms of stock relative to the the historical FAANGs.
I suspect they meant Nvidia, not Netflix; after all, the letters in MANGA are exactly the initials of the companies listed in the post they were replying to.
FANG (notice the missing A) was always a meaningless term. Cramer initially left Apple off and it was already the most valuable company, Microsoft was already in the top 5 most valuable and Netflix was t really that valuable then.
At least investing in companies that will buy Nvidia makes sense somewhat, even if it feels dodgy. What possible sense does it make for Nvidia to invest in a maker of telecom equipment (Nokia) with no public plan, and the value of the investment jumps 30% as soon as it’s announced? It’s not like call routing needs to be “AI enabled” or they’re putting Nvidia GPUs in their custom silicon.
Feels like Nvidia has too much money and they know whatever they invest in will appreciate thanks to the “AI premium” that investors bestow.
Nokia had some of the best mobile hardware (and software!) in the game until they were bought by Microsoft and promptly killed.
I've been patiently waiting for their resurgence. Building embedded/mobile devices is their forte, which is also coincidentally the hardware space where AI is most poised to shine. Nvidia made a move in the same direction when they tried to acquire ARM. That got antitrusted (fairly so) but investing in a now-decimated telecom company isn't likely to ruffle any feathers this way.
> I've been patiently waiting for their resurgence. Building embedded/mobile devices is their forte
Wouldn't most of those people have gone elsewhere by now? If you're a mobile device superstar, why would you stick around at Nokia once the mobile device part of it crashed and burned?
A company's just a legal structure, people change over time. And that was more than 10 years ago, and didn't they sell their mobile division to Microsoft?
(Nokia went from king to pauper in the year when the iPhone and then Android launched. They death spiralled and Elop was brought in a few years later to transition them to using Microsoft Windows mobile. However, windows mobile was as old and uncompetitive as Symbian so couldn’t compete. Was very obvious at the time although the boards seem to have been living in their dream worlds)
There is a public plan (literal press releases) and it is to use Nvidia Grace chips in Nokia’s future RAN products. Seems to have cooling issues but seems to be a nice chip for the most part.
Nvidia quietly in the background is getting more interested in the network side of things and are hiring accordingly. This is an area I don’t really think you have all the details to have an opinion on imo.
Nvidia is basically allowing some of its clients to pay with partial ownership of their companies instead of with cash for the chips they want, because there's simply not enough cash in them for the lofty goals lots of people think are achievable.
God that sounds so crazy. Its giving me "sell our municipal water to Private Equity to buy a park, imagine the tax revenue!" vibes except its just diluting the shares.
It feels like economics in the US is turning into FanDuel mobile gambling. Can we pass a law to disincentivize this garbage and make them start paying dividends again?
Nvidia can do that because what they sell has an insane markup. Nvidia is getting a billion dollars in equity for input spending of a hundred million. Nvidia is creating demand for it’s products and in turn getting ownership in companies for cheap. It’s like being a VC but your investments are chips and the chips also count as revenue for you.
Also Broadcom - most enterprises with significant ML compute needs are working building their own custom ASICs, and it's Broadcom that owns the entire custom market.
I think the actual reason market caps got so high is money printing. Because there are trillions more dollars, stock markets are trillions of dollars higher. Might be a conspiracy theory though.
It’s quite possible that they’d want to do the layoffs regardless, and the AI narrative just gives them a convenient excuse, with the added bonus that it also happens to promote AI.
Agree that "firing everyone" is exaggerated, but what we're seeing now is pretty unique. Headcount increases between 2010~2022 at these companies were around 15~25% CAGR; now, it's at best flat for the past ~3 years. I think that's going to make a pretty big dent.
We’re in a general economic decline masked, in some key aggregate measures, by the AI bubble. That’s the reason for the job cuts.
Shuffling money around between AI adjacent companies may (but I doubt it) be enough to keep the AI bubble going through the downturn, in which case stockholders in those key companies manage to ride it out without pain, and executives too because they serve their constituency well.
Still, most analysts attributed the slowdown to industrywide challenges, not company-specific issues that Chipotle needs to address. Unemployment, increased student loan repayments and slower real wage growth accounting for inflation are weighing on consumers’ spending, according to Boatwright.
EY forecasts 1.7% GDP growth, most of which is AI (~1.1% according to jpmorgan). The broader economy is facing headwinds (policy uncertainty, tariffs, etc etc).
> Overall, underlying economic momentum remained steady in the first half of the year despite mounting policy headwinds. But with the impact of tariffs and policy uncertainty becoming increasingly visible, slower US growth and higher inflation are still on the horizon.
Trump inherited a good economy and set it towards decline. If that's still not clear stay tuned, there's more to come.
Total anecdote here: Watching college ball today and nearly every commercial (80%+) are Christmas commercials in some way. The day after Halloween, not the day after Thanksgiving. I know Christmas creep is a thing, and I may not have been paying attention in past years, but it seems like companies are desperate for black Friday to come this year
Both "everyone" and "to fund AI" are doing a lot of work there. There probably was a lot of hiring in excess of requirements in tech over the past five years or whatever--and a bunch of people who jumped on board the ship primarily to capitalize on the gold rush are going to end up suffering as a result. Doesn't mean that tech generally isn't still a big opportunity going forward but may very well mean that outsized tech money opportunity on the west coast of the US declines. (And cost of living declines will lag) It's happened before with respect to the other coast (and the Midwest to some degree).
The consumption side has so far been held up by higher income consumers. Now that so many of them are being fired all that’s left to prop up the economy is AI spend. I’ve heard some think it could go on for a few more years but I’ve also increasingly seen bubble / circular finance posts so it feels like we’re getting closer.
While there are points here that I agree with, I do not agree with the premise that they are firing people to fund AI. Funding of AI (keyword funding, not usage) I would say is an adjacent relation, but not the reason people are being let go.
I think it's a combination of factors including:
- Overhiring in the past, most of these companies were/are still employing way above the pre-pandemic numbers when overhiring was the norm. Many of these companies legitimately probably have more people than they need still.
- No matter what you think, AI is certainly already capable of improving productivity enough to make up for many of the jobs lost. Just look at how much AI can do today compared to even just a couple years ago. Practically every engineer who is worth their salt can put out way more than they previously could. Yes there is the question of quality and whether that's going to keep up, but you simply cannot argue at this point that AI is not able to increase productivity enough for the decreased headcount. Theres a reason junior hiring has fallen, they expect senior engineers to both output more using AI and to have the capability of effectively reeling it in and reviewing.
- As much as I hate to say it because it gets people angry and political: offshoring. Every company that I've worked on or worked at in the last few years has increased headcount of offshore employees and contractors.
- And lastly is simply expectations. Executives can see that other companies that have let go of people are able to still effectively run much slimmer.
This is turning out to be more wasteful than arms race. Companies are locked into a vicious spiral built by themselves. The only hope appears to be a bubble burst that wakes up investors.
The poster is kind of missing the point. If I see a tool that could make a lot of my employees 20% more efficient today, and maybe more than that in the future, I’m going to bet big on it.
Layoffs aren’t just to “fund AI” - layoffs (a) always happen and (b) likely genuinely make sense at some scale due to efficiency gain from AI.
It’s not “cut employees, send they money in circles to prop up stock prices” it’s “cut employees, like we always do (but more than usual since we have actual AI efficiency gains).” Separately, let’s yeet excess money in circles to prop up our stock price and AI is a great hype cycle vehicle for that.
Yeah layoffs always suck, especially big ones, but they literally always happen and IMO are not caused by AI circlejerking at the c level.
Also, for anyone curious about “AI gains”. In my role at bigtech company I need to have a high/medium level understanding of like 30 products and teams. LLM summaries of docs, tickets, slack, etc mean I can get a basic understanding and history of any topic in seconds, rather than spending hours reading all those sources. My role is not unique or special
We use llms more for finding the correct doc, and then actually reading the doc ourselves. It’s really just a very good search and summarization tool for when there are tens of thousands of potentially relevant docs
From a company point of view, collapse and rebirth - when large companies fail they often end up spinning off lots of little companies some succeed, some fail and some massively succeed and the cycle repeats.
Someone will get left holding the bag because someone always gets left holding the bag - often lots of someones.
These are AI companies though, we cannot let them collapse. They will receive bailouts from the US taxpayer, they will not break up. If the US loses its tech companies, what economic advantage does it have left? Tech companies are literally the last crown jewel in America's crown; all the rest have fallen out and gotten lost.
I rarely post comments on LinkedIn, but I saw some of the dumbest content today and felt compelled to leave a response:
> Just met a founder who fired his entire team because he was able to individually beat their entire productivity with Claude Code
My only thought when I read this is that this absolutely embarrassing...for founder who wasted dozens of hours recruiting, qualifiying, interviewing, onboarding, and training these resources. Then paying their salaries for who knows how long!
It just came across as some of the most small-brain thinking that anyone would then "Like" this content and not see it for what it is: idiotic management and leadership and just complete lack of basic foresight.
Why are you hiring absolutely replaceable people in the first place?
What's weird to me is that they say 'well, with AI we need less people for the same output.'
Why is the conversation rarely framed 'with AI we will move faster and have more output'?
It feels like companies would be well served to expand their product teams and roadmaps to go bigger, but instead choose to hold the pace now with less headcount.
Less headcount usually means faster pace - less lines of comminication, less red tape etc.
Or at least that's what many C-level people believe to be true. "We need to move like a startup" is a common mantra repeated by executives, even megacorps like Amazon.
I guess it's true to some degree though, anecdotally as an IC at a tech company, I feel like I could move a lot faster if some people around me removed and replaced by an automation instead.
Once the dust settles around AI, I agree with you. Unless we think the collective company's backlogs are going to stop being infinite, then any extra productivity that can be gained will be gained.
With that said, I think AI is just cover for the current set of layoffs. Companies are still right sizing from the pandemic/ZIRP over-hiring. Additionally, while none will say it at the risk of angering the administration, the economic uncertainty based on how someone is feeling day to day means companies want to derisk.
The moving faster is how it would work in a good economy with investment dollars. We're in a cycle where we need excuses to lay people off so that's AIs main use case.
It feels like poor technical leadership to me. Who knows how large that team was, maybe its 2-3 people, but it also sounds like they don't know how to manage them.
The flip side is now there's nobody else to troubleshoot when the house of cards inevitably collapses. Whats he gonna do, "Hey Siri, do a security review on this codebase"?
Quantity has a quality of its own, but I feel like if its a website with an iOS app you're just vibe coding your way towards the memes, and if its something actually pushing the envelope one guy and an API key isn't going to cut it, no matter how many tokens you spit out.
> It just came across as some of the most small-brain thinking that anyone would then "Like" this content and not see it for what it is: idiotic management and leadership and just complete lack of basic foresight.
It's not even that. It's just straight up lying. The most generous interpretation is that his "team" was Fiverr contractors who were working part-time for $10/hour. More likely is he never had a team to begin with.
You can just say things. You can just say that you've unlocked 1000x productivity gains with AI and "agentic processes" and investors and AI boosters are so eager to believe this nobody will bother fact checking it.
100% this. The culture has shifted toward normalizing lying to such a degree that now, most people will stare you in the eye and lie to your face for the sake of self-preservation. Low-trust is now the default, high-trust is a rare luxury. Most people are just demi-Barnum's now (and if they're not, their brain has been so utterly cooked by the spectacle that they may as well be running a scam relative to the lack of actual value they produce).
There has never been a better time to build. The vast majority of executives likely don't comprehend AI and it's capability. (I'm not talking about silicon valley) I'm talking about everything else.
The highly likely scenario is that:
- These people will spend money on "AI" to solve stuff to keep their job
- These people will be so slow to respond that they are ripe for disruption/exit.
Doesn't pass the smell test as someone who has been on boards that made these decisions.
This would be like saying cloud spend was circular because F1000 tech companies represent the majority of cloud spend from a revenue perspective, but tend to sell or partner with those same organizations. For example, AWS and Zscaler, or GCP and Broadcom.
Reality is, a lot of product lines were formed or overhired with little-to-no business justification during the late 2010s and early 2020s. Most of us are now cleaning shop and axing those product lines and features that cannot be attached to tangible revenue generation. Inevitably this leads to ICs getting axed.
If you want to blame someone, blame EMs, PMs, Principal SWEs, and VPs who decided to launch product lines and features for their resume instead of for business justification. (Edit: that said, BeFlatXIII is right that we probably won't have hired most people if this didn't happen at all)
Additionally, comp expectations just got too high - most new grads are not worth $150k-200k TC (some absolutely are though)
Agree with a lot of this. But on the last point, that’s the “blame middle management” theory. And I have seen outrageous, florid displays of exactly that behavior in those ranks.
But the CEOs have been there all along, doing the math on ZIRP and getting caught up in FOMO. They could have tightened their belts at any time, or demanded better justifications for investments. Why didn’t they?
> But the CEOs have been there all along, doing the math on ZIRP and getting caught up in FOMO. They could have tightened their belts at any time, or demanded better justifications for investments. Why didn’t they?
Because the job of a CEO is not to micromanage. The whole point of hiring middle management is to keep CEOs out of micromanaging decisions.
The job of C-suite is to
1. Be the arbitrator between different orgs
2. Be the primary salesperson - a large portion of corporations will not purchase without a CEO or CTO being in the same room and giving the same promises
3. Manage investor and board relations
We (c-suite, boards) give middle management significant autonomy to shape roadmaps and organizational structure explicitly because we assume they are adults as well. Some amount of lossage and BS is expected, but the kind of financial slack that existed a couple years ago to cushion these blows doesn't exist anymore.
If you (c-suite, boards) aren’t giving direction then how are the middle managers supposed to know what to build so that it aligns with long term growth goals? This feels like abdicating responsibility and then firing people for building the wrong thing when you never told them what to build in the first place?
> you (c-suite, boards) aren’t giving direction then how are the middle managers supposed to know what to build so that it aligns with long term growth goals...
> This feels like abdicating responsibility...
How a tech company is supposed to work is:
1. You get feedback from a cohort of customers. This is primarily collected by the CEO and Sales, as well as PMs.
2. Based on feedback collected, you then decide what to prioritize or build. This is primarily done by Product Management
3. Based on the scoped feature, you then try to understand how long it takes to build and what is the expected cost to build. This is primarily done by Engineering Management and a bit of Product Management
4. Based on the scoped proposal, now you try to project net new ARR and COGS that can be attributed to that proposal. This is done by Product Management with coordination with Sales and a subset of Engineering Management
5. Based on the set of proposals that have come in from all PMs and EMs, you now decide which ones make sense with existing customer demand, and which can drive revenue. This is done by Product and Engineering Leadership.
6. Based on those proposals that passed muster, you now propose an annual operating plan (AOP) to the board to justify headcount allocation. This is done by the C-Suite.
In a normal tech company, the primary steps (2-5) are done without the CEO in the conversation because that is not the job of the CEO. Their job is supposed to be the Sales and Customer Relations Manager for your largest 20 accounts, Investor Relation Management, and arbitrate between the various different functions within an organization.
A CEO is not expected to take part in the larger product creation lifecycle because it creates fear amongst ICs, because no one below the VP level wants to give a CEO unadulterated feedback - even if they really trust them - because of the power differential. This is why most CEO-driven initiatives have been severe boondoggles, such as Zuckerberg and the Metaverse, because no one could tell Mark otherwise and expect to keep their job - even people as powerful internally as Sheryl Sandberg (COO), Mike Schroepfer (CTO), and Marne Levine (CBO).
We are all adults. It is expected that people in your reporting structure are adults who are aligned with the primary incentive of the business - generate growing revenue while maintaining or enhancing COGS.
Mind you, this is the ideal world. Like everything else, humans muck it up. Boards, C-Suites, Mid-Level managers, and line level ICs all have various relationships with each other, and in a lot of cases, rational business decisions are disincentivized in order to prioritize personal decisions.
The directive to hire like crazy during the pandemic was a perfect example of an executive decision: should we incur long-term financial obligation (salary, cost of hiring, risk to culture leading to inefficiency) based on short-term conditions (Zirp, hot job market, fluff about AI)?
And they generally got it wrong, so they are in good company with each other. Is that because they were all equally smart? Or because they are sheep?
I dunno, it doesn't pass the smell test that for a decade everyone was adding useless products and now in '25 they're all having their come-to-jesus. I also don't that buy everyone is firing to spend on AI either.
It's more that they intend to spend loads and loads on capital spend (for AI). Therefore, they should lay people off to keep margin constant. Now clearly they believe that the capex is worth it, but they're mostly trying to manage their share price.
> If you want to blame someone, blame EMs, PMs, Principal SWEs, and VPs who decided to launch product lines and features for their resume instead of for business justification.
Arguably, thank them. The alternate is more likely that those jobs never would've existed, not that they'd have the same jobs with same TC but somehow in profitable business units. Enjoy having milked the job while it lasted instead of being stuck in a lower-paying career the entire time.
> If you want to blame someone, blame EMs, PMs, Principal SWEs, and VPs who decided to launch product lines and features for their resume instead of for business justification.
And the people in charge had no say in the matter.
I remember watching the firings of people right before the dot com bubble burst. Instead of pay employee's, companies thought they could double down and started putting MORE money into vaporware companies that eventually folded up and went bankrupt. I'm guessing were almost to that last stage again...
Most companies using AI are just paying for a subscription. They aren't actually building LLMs or other machine learning applications that take over a known task. You could easily replace the term AI with just subscription.
When they say they are laying off workers, they are saying "we signed up for Cursor, and enabled some AI features on Jira and Salesforce"
The layoff is just an excuse until they realize that just because Jira can write a summary of the ticket, doesn't mean the ticket gets done any faster.
And keep in mind that while the company may care about its overall efficiency, its individual organs only care about their internal incentives. If the LLM gets the ticket out of someone's area of responsibility faster, why do they care if that makes it harder for someone else?
The "spending money on each other" part is untrue. It is mostly going in one direction, towards Nvidia, and that's the reason they crossed $5 Trillion in market cap recently.
I found John Gruber's roundup of tech company profits (not revenue) interesting: https://daringfireball.net/linked/2025/10/30/apple-q4-result...
- Google (a.k.a. Alphabet): $35B
- Microsoft: $27.7B
- Apple: $27.5B
- Nvidia: $26.4B
- Amazon: $21.5B
Is it a coincidence that 3 of 5 are so close?
Pretty much coincidence, yes
Yes, completely different revenue sources.
MANGA is the new FAANG.
Just use BigTech, then you don't have to keep shuffling letters nor inserting Netflix to prevent it becoming a slur.
https://en.wikipedia.org/wiki/Big_Tech
The N was really Netflix originally when it was the poster child for AWS consumption before NVIDEA/AI was even in the conversation. But, yes, "Big Tech" is probably the best term these days to avoid debates about whether this company or that company really belongs in the category--especially given that certain companies have done very well in terms of stock relative to the the historical FAANGs.
I suspect they meant Nvidia, not Netflix; after all, the letters in MANGA are exactly the initials of the companies listed in the post they were replying to.
FANG (notice the missing A) was always a meaningless term. Cramer initially left Apple off and it was already the most valuable company, Microsoft was already in the top 5 most valuable and Netflix was t really that valuable then.
Then Nvidia is turning around and investing back in the AI companies so they can in turn buy Nvidia chips...
At least investing in companies that will buy Nvidia makes sense somewhat, even if it feels dodgy. What possible sense does it make for Nvidia to invest in a maker of telecom equipment (Nokia) with no public plan, and the value of the investment jumps 30% as soon as it’s announced? It’s not like call routing needs to be “AI enabled” or they’re putting Nvidia GPUs in their custom silicon.
Feels like Nvidia has too much money and they know whatever they invest in will appreciate thanks to the “AI premium” that investors bestow.
Nokia had some of the best mobile hardware (and software!) in the game until they were bought by Microsoft and promptly killed.
I've been patiently waiting for their resurgence. Building embedded/mobile devices is their forte, which is also coincidentally the hardware space where AI is most poised to shine. Nvidia made a move in the same direction when they tried to acquire ARM. That got antitrusted (fairly so) but investing in a now-decimated telecom company isn't likely to ruffle any feathers this way.
> I've been patiently waiting for their resurgence. Building embedded/mobile devices is their forte
Wouldn't most of those people have gone elsewhere by now? If you're a mobile device superstar, why would you stick around at Nokia once the mobile device part of it crashed and burned?
A company's just a legal structure, people change over time. And that was more than 10 years ago, and didn't they sell their mobile division to Microsoft?
(Nokia went from king to pauper in the year when the iPhone and then Android launched. They death spiralled and Elop was brought in a few years later to transition them to using Microsoft Windows mobile. However, windows mobile was as old and uncompetitive as Symbian so couldn’t compete. Was very obvious at the time although the boards seem to have been living in their dream worlds)
nokia is live and well. It is tier 1 player in teleco hardware
There is a public plan (literal press releases) and it is to use Nvidia Grace chips in Nokia’s future RAN products. Seems to have cooling issues but seems to be a nice chip for the most part.
Nvidia quietly in the background is getting more interested in the network side of things and are hiring accordingly. This is an area I don’t really think you have all the details to have an opinion on imo.
Nokia has a public plan to build 6G network infrastructure. I'm not sure how realistic it is.
https://nvidianews.nvidia.com/news/nvidia-nokia-ai-telecommu...
Nvidia is basically allowing some of its clients to pay with partial ownership of their companies instead of with cash for the chips they want, because there's simply not enough cash in them for the lofty goals lots of people think are achievable.
God that sounds so crazy. Its giving me "sell our municipal water to Private Equity to buy a park, imagine the tax revenue!" vibes except its just diluting the shares.
It feels like economics in the US is turning into FanDuel mobile gambling. Can we pass a law to disincentivize this garbage and make them start paying dividends again?
Isn’t the problem rooted in stock buybacks? Making it illegal could bring dividends and realign incentives.
Please! Has Amazon ever paid out a dividend???
Nvidia can do that because what they sell has an insane markup. Nvidia is getting a billion dollars in equity for input spending of a hundred million. Nvidia is creating demand for it’s products and in turn getting ownership in companies for cheap. It’s like being a VC but your investments are chips and the chips also count as revenue for you.
But if there is a bubble Nvidia is making it worse this way and will get hit hard itself.
that's kind of like writing options. if you think about it, it's not that crazy.
Which is perfectly legal, correct?
I'll answer my own comment, yes, it is legal. If there are any known issues indicating wrong doing, report it to the DOJ or FTC.
Not anymore.
https://www.reuters.com/business/nvidia-invest-100-billion-o...
Also Broadcom - most enterprises with significant ML compute needs are working building their own custom ASICs, and it's Broadcom that owns the entire custom market.
I think the actual reason market caps got so high is money printing. Because there are trillions more dollars, stock markets are trillions of dollars higher. Might be a conspiracy theory though.
Not really a conspiracy theory but just normal economics.
It’s quite possible that they’d want to do the layoffs regardless, and the AI narrative just gives them a convenient excuse, with the added bonus that it also happens to promote AI.
Yep, layoffs keep the cost of labor down, so if they can do it without affecting what they really care about they will
"Firing everyone" is greatly exaggerated.
Google is not at its all-time high, but still pretty close:
https://www.macrotrends.net/stocks/charts/GOOG/alphabet/numb...
Amazon: similar.
https://www.macrotrends.net/stocks/charts/AMZN/amazon/number...
Microsoft: all time high?
https://www.macrotrends.net/stocks/charts/MSFT/microsoft/num...
It sucks if you need to find work, but these are still major employers, even after large layoffs. They can lay off thousands without much of a dent.
I'm old, I remember when Google was 20k people and I thought that was enormous.
Agree that "firing everyone" is exaggerated, but what we're seeing now is pretty unique. Headcount increases between 2010~2022 at these companies were around 15~25% CAGR; now, it's at best flat for the past ~3 years. I think that's going to make a pretty big dent.
We’re in a general economic decline masked, in some key aggregate measures, by the AI bubble. That’s the reason for the job cuts.
Shuffling money around between AI adjacent companies may (but I doubt it) be enough to keep the AI bubble going through the downturn, in which case stockholders in those key companies manage to ride it out without pain, and executives too because they serve their constituency well.
More likely, it just delays the reckoning.
> general economic decline
I'm not seeing it, do you have any proof you can offer that your statement is true?
Unemployment is the highest since 2021:
https://tradingeconomics.com/united-states/unemployment-rate
Consumer staples have seen almost a 20% decline in EPS YoY:
https://ycharts.com/indicators/sandp_500_consumer_staples_ea...
A specific example is Chipotle. It could certainly be company specific, but could also highlight a consumer trend.
https://www.cnbc.com/2025/10/30/chipotle-stock-falls-after-q...
Still, most analysts attributed the slowdown to industrywide challenges, not company-specific issues that Chipotle needs to address. Unemployment, increased student loan repayments and slower real wage growth accounting for inflation are weighing on consumers’ spending, according to Boatwright.
I'm not sure how much significance I would attribute to a specific fairly crappy mid-range chain restaurant's woes.
https://www.ey.com/en_us/insights/strategy/macroeconomics/us...
https://am.jpmorgan.com/us/en/asset-management/adv/insights/...
EY forecasts 1.7% GDP growth, most of which is AI (~1.1% according to jpmorgan). The broader economy is facing headwinds (policy uncertainty, tariffs, etc etc).
The signs point to a mixed picture, not a general economic decline.
EY says
> Overall, underlying economic momentum remained steady in the first half of the year despite mounting policy headwinds. But with the impact of tariffs and policy uncertainty becoming increasingly visible, slower US growth and higher inflation are still on the horizon.
Trump inherited a good economy and set it towards decline. If that's still not clear stay tuned, there's more to come.
Total anecdote here: Watching college ball today and nearly every commercial (80%+) are Christmas commercials in some way. The day after Halloween, not the day after Thanksgiving. I know Christmas creep is a thing, and I may not have been paying attention in past years, but it seems like companies are desperate for black Friday to come this year
Both "everyone" and "to fund AI" are doing a lot of work there. There probably was a lot of hiring in excess of requirements in tech over the past five years or whatever--and a bunch of people who jumped on board the ship primarily to capitalize on the gold rush are going to end up suffering as a result. Doesn't mean that tech generally isn't still a big opportunity going forward but may very well mean that outsized tech money opportunity on the west coast of the US declines. (And cost of living declines will lag) It's happened before with respect to the other coast (and the Midwest to some degree).
The consumption side has so far been held up by higher income consumers. Now that so many of them are being fired all that’s left to prop up the economy is AI spend. I’ve heard some think it could go on for a few more years but I’ve also increasingly seen bubble / circular finance posts so it feels like we’re getting closer.
While there are points here that I agree with, I do not agree with the premise that they are firing people to fund AI. Funding of AI (keyword funding, not usage) I would say is an adjacent relation, but not the reason people are being let go.
I think it's a combination of factors including:
- Overhiring in the past, most of these companies were/are still employing way above the pre-pandemic numbers when overhiring was the norm. Many of these companies legitimately probably have more people than they need still.
- No matter what you think, AI is certainly already capable of improving productivity enough to make up for many of the jobs lost. Just look at how much AI can do today compared to even just a couple years ago. Practically every engineer who is worth their salt can put out way more than they previously could. Yes there is the question of quality and whether that's going to keep up, but you simply cannot argue at this point that AI is not able to increase productivity enough for the decreased headcount. Theres a reason junior hiring has fallen, they expect senior engineers to both output more using AI and to have the capability of effectively reeling it in and reviewing.
- As much as I hate to say it because it gets people angry and political: offshoring. Every company that I've worked on or worked at in the last few years has increased headcount of offshore employees and contractors.
- And lastly is simply expectations. Executives can see that other companies that have let go of people are able to still effectively run much slimmer.
Elon wrote "The Mythical Man Month" 21thC edition..
This is turning out to be more wasteful than arms race. Companies are locked into a vicious spiral built by themselves. The only hope appears to be a bubble burst that wakes up investors.
Are the layoffs devs? When there are 30k people I assume its warehouse workers.
"Corporate job cuts"
https://www.reuters.com/business/world-at-work/amazon-target...
Microsoft have Azure, they don't need to rent cloud compute from AWS.
The poster is kind of missing the point. If I see a tool that could make a lot of my employees 20% more efficient today, and maybe more than that in the future, I’m going to bet big on it.
Layoffs aren’t just to “fund AI” - layoffs (a) always happen and (b) likely genuinely make sense at some scale due to efficiency gain from AI.
It’s not “cut employees, send they money in circles to prop up stock prices” it’s “cut employees, like we always do (but more than usual since we have actual AI efficiency gains).” Separately, let’s yeet excess money in circles to prop up our stock price and AI is a great hype cycle vehicle for that.
Yeah layoffs always suck, especially big ones, but they literally always happen and IMO are not caused by AI circlejerking at the c level.
Also, for anyone curious about “AI gains”. In my role at bigtech company I need to have a high/medium level understanding of like 30 products and teams. LLM summaries of docs, tickets, slack, etc mean I can get a basic understanding and history of any topic in seconds, rather than spending hours reading all those sources. My role is not unique or special
Curious, how do you deal with hallucinations for important stuff ?
We use llms more for finding the correct doc, and then actually reading the doc ourselves. It’s really just a very good search and summarization tool for when there are tens of thousands of potentially relevant docs
I've been wondering for a long time what the end stage of this current trend of capitalist self-cannibalization is going to look like.
I'm not terribly surprised.
From a company point of view, collapse and rebirth - when large companies fail they often end up spinning off lots of little companies some succeed, some fail and some massively succeed and the cycle repeats.
Someone will get left holding the bag because someone always gets left holding the bag - often lots of someones.
These are AI companies though, we cannot let them collapse. They will receive bailouts from the US taxpayer, they will not break up. If the US loses its tech companies, what economic advantage does it have left? Tech companies are literally the last crown jewel in America's crown; all the rest have fallen out and gotten lost.
Singularity, merge, Kardashev 2+.
The exciting AI ending. When all the companies selling boondoggles fire their employees, who is left with money to buy the boondoggles?
I rarely post comments on LinkedIn, but I saw some of the dumbest content today and felt compelled to leave a response:
My only thought when I read this is that this absolutely embarrassing...for founder who wasted dozens of hours recruiting, qualifiying, interviewing, onboarding, and training these resources. Then paying their salaries for who knows how long!It just came across as some of the most small-brain thinking that anyone would then "Like" this content and not see it for what it is: idiotic management and leadership and just complete lack of basic foresight.
Why are you hiring absolutely replaceable people in the first place?
More like "I need to fire everyone, how can I spin this?"
Don't forget the implicit admission that "my product can be made in claude code."
Yes; many of these supposed "flexes" are not the flex that these founders think they are.
They are probably one fork away of having a full product but open source is considered boring now.
What's weird to me is that they say 'well, with AI we need less people for the same output.'
Why is the conversation rarely framed 'with AI we will move faster and have more output'?
It feels like companies would be well served to expand their product teams and roadmaps to go bigger, but instead choose to hold the pace now with less headcount.
Less headcount usually means faster pace - less lines of comminication, less red tape etc.
Or at least that's what many C-level people believe to be true. "We need to move like a startup" is a common mantra repeated by executives, even megacorps like Amazon.
I guess it's true to some degree though, anecdotally as an IC at a tech company, I feel like I could move a lot faster if some people around me removed and replaced by an automation instead.
But that's not the claim being made. It's about only slightly lowering output or even reducing output for a much larger reduction in spending.
What they're doing is "doing less with less", as they say.
Once the dust settles around AI, I agree with you. Unless we think the collective company's backlogs are going to stop being infinite, then any extra productivity that can be gained will be gained.
With that said, I think AI is just cover for the current set of layoffs. Companies are still right sizing from the pandemic/ZIRP over-hiring. Additionally, while none will say it at the risk of angering the administration, the economic uncertainty based on how someone is feeling day to day means companies want to derisk.
The moving faster is how it would work in a good economy with investment dollars. We're in a cycle where we need excuses to lay people off so that's AIs main use case.
Reducing expenses and increasing profit NOW is the goal of shortsighted leaders.
Who cares about any other path - get rich quick!!
It feels like poor technical leadership to me. Who knows how large that team was, maybe its 2-3 people, but it also sounds like they don't know how to manage them.
The flip side is now there's nobody else to troubleshoot when the house of cards inevitably collapses. Whats he gonna do, "Hey Siri, do a security review on this codebase"?
Quantity has a quality of its own, but I feel like if its a website with an iOS app you're just vibe coding your way towards the memes, and if its something actually pushing the envelope one guy and an API key isn't going to cut it, no matter how many tokens you spit out.
Probably just trying to save face after having to close down/scale back the startup to zero.
You too can be a 1 man startup founder.
> It just came across as some of the most small-brain thinking that anyone would then "Like" this content and not see it for what it is: idiotic management and leadership and just complete lack of basic foresight.
It's not even that. It's just straight up lying. The most generous interpretation is that his "team" was Fiverr contractors who were working part-time for $10/hour. More likely is he never had a team to begin with.
You can just say things. You can just say that you've unlocked 1000x productivity gains with AI and "agentic processes" and investors and AI boosters are so eager to believe this nobody will bother fact checking it.
100% this. The culture has shifted toward normalizing lying to such a degree that now, most people will stare you in the eye and lie to your face for the sake of self-preservation. Low-trust is now the default, high-trust is a rare luxury. Most people are just demi-Barnum's now (and if they're not, their brain has been so utterly cooked by the spectacle that they may as well be running a scam relative to the lack of actual value they produce).
Best part: now the ceo can't hire because he's too busy building and debugging agents
I mean theyre probably lying so..
I can't believe anyone is that dumb
High risk, high reward is not a viable long term strategy for anything. Good luck with your AI employees when they botch an update and you're skiing.
There has never been a better time to build. The vast majority of executives likely don't comprehend AI and it's capability. (I'm not talking about silicon valley) I'm talking about everything else.
The highly likely scenario is that: - These people will spend money on "AI" to solve stuff to keep their job - These people will be so slow to respond that they are ripe for disruption/exit.
Feels like the actual AI behind the workforce reductions is Ascended Interest (rates).
Doesn't pass the smell test as someone who has been on boards that made these decisions.
This would be like saying cloud spend was circular because F1000 tech companies represent the majority of cloud spend from a revenue perspective, but tend to sell or partner with those same organizations. For example, AWS and Zscaler, or GCP and Broadcom.
Reality is, a lot of product lines were formed or overhired with little-to-no business justification during the late 2010s and early 2020s. Most of us are now cleaning shop and axing those product lines and features that cannot be attached to tangible revenue generation. Inevitably this leads to ICs getting axed.
If you want to blame someone, blame EMs, PMs, Principal SWEs, and VPs who decided to launch product lines and features for their resume instead of for business justification. (Edit: that said, BeFlatXIII is right that we probably won't have hired most people if this didn't happen at all)
Additionally, comp expectations just got too high - most new grads are not worth $150k-200k TC (some absolutely are though)
Agree with a lot of this. But on the last point, that’s the “blame middle management” theory. And I have seen outrageous, florid displays of exactly that behavior in those ranks.
But the CEOs have been there all along, doing the math on ZIRP and getting caught up in FOMO. They could have tightened their belts at any time, or demanded better justifications for investments. Why didn’t they?
> But the CEOs have been there all along, doing the math on ZIRP and getting caught up in FOMO. They could have tightened their belts at any time, or demanded better justifications for investments. Why didn’t they?
Because the job of a CEO is not to micromanage. The whole point of hiring middle management is to keep CEOs out of micromanaging decisions.
The job of C-suite is to
1. Be the arbitrator between different orgs
2. Be the primary salesperson - a large portion of corporations will not purchase without a CEO or CTO being in the same room and giving the same promises
3. Manage investor and board relations
We (c-suite, boards) give middle management significant autonomy to shape roadmaps and organizational structure explicitly because we assume they are adults as well. Some amount of lossage and BS is expected, but the kind of financial slack that existed a couple years ago to cushion these blows doesn't exist anymore.
If you (c-suite, boards) aren’t giving direction then how are the middle managers supposed to know what to build so that it aligns with long term growth goals? This feels like abdicating responsibility and then firing people for building the wrong thing when you never told them what to build in the first place?
> you (c-suite, boards) aren’t giving direction then how are the middle managers supposed to know what to build so that it aligns with long term growth goals...
> This feels like abdicating responsibility...
How a tech company is supposed to work is:
1. You get feedback from a cohort of customers. This is primarily collected by the CEO and Sales, as well as PMs.
2. Based on feedback collected, you then decide what to prioritize or build. This is primarily done by Product Management
3. Based on the scoped feature, you then try to understand how long it takes to build and what is the expected cost to build. This is primarily done by Engineering Management and a bit of Product Management
4. Based on the scoped proposal, now you try to project net new ARR and COGS that can be attributed to that proposal. This is done by Product Management with coordination with Sales and a subset of Engineering Management
5. Based on the set of proposals that have come in from all PMs and EMs, you now decide which ones make sense with existing customer demand, and which can drive revenue. This is done by Product and Engineering Leadership.
6. Based on those proposals that passed muster, you now propose an annual operating plan (AOP) to the board to justify headcount allocation. This is done by the C-Suite.
In a normal tech company, the primary steps (2-5) are done without the CEO in the conversation because that is not the job of the CEO. Their job is supposed to be the Sales and Customer Relations Manager for your largest 20 accounts, Investor Relation Management, and arbitrate between the various different functions within an organization.
A CEO is not expected to take part in the larger product creation lifecycle because it creates fear amongst ICs, because no one below the VP level wants to give a CEO unadulterated feedback - even if they really trust them - because of the power differential. This is why most CEO-driven initiatives have been severe boondoggles, such as Zuckerberg and the Metaverse, because no one could tell Mark otherwise and expect to keep their job - even people as powerful internally as Sheryl Sandberg (COO), Mike Schroepfer (CTO), and Marne Levine (CBO).
We are all adults. It is expected that people in your reporting structure are adults who are aligned with the primary incentive of the business - generate growing revenue while maintaining or enhancing COGS.
Mind you, this is the ideal world. Like everything else, humans muck it up. Boards, C-Suites, Mid-Level managers, and line level ICs all have various relationships with each other, and in a lot of cases, rational business decisions are disincentivized in order to prioritize personal decisions.
The directive to hire like crazy during the pandemic was a perfect example of an executive decision: should we incur long-term financial obligation (salary, cost of hiring, risk to culture leading to inefficiency) based on short-term conditions (Zirp, hot job market, fluff about AI)?
And they generally got it wrong, so they are in good company with each other. Is that because they were all equally smart? Or because they are sheep?
I dunno, it doesn't pass the smell test that for a decade everyone was adding useless products and now in '25 they're all having their come-to-jesus. I also don't that buy everyone is firing to spend on AI either.
It's more that they intend to spend loads and loads on capital spend (for AI). Therefore, they should lay people off to keep margin constant. Now clearly they believe that the capex is worth it, but they're mostly trying to manage their share price.
> If you want to blame someone, blame EMs, PMs, Principal SWEs, and VPs who decided to launch product lines and features for their resume instead of for business justification.
Arguably, thank them. The alternate is more likely that those jobs never would've existed, not that they'd have the same jobs with same TC but somehow in profitable business units. Enjoy having milked the job while it lasted instead of being stuck in a lower-paying career the entire time.
> If you want to blame someone, blame EMs, PMs, Principal SWEs, and VPs who decided to launch product lines and features for their resume instead of for business justification.
And the people in charge had no say in the matter.
The circular financing of AI spend isn't exactly a new story. Pretty sure even Altman has publicly said it's bubble
I remember watching the firings of people right before the dot com bubble burst. Instead of pay employee's, companies thought they could double down and started putting MORE money into vaporware companies that eventually folded up and went bankrupt. I'm guessing were almost to that last stage again...