Artificial intelligence has sparked a significant upward trend in the stock market, driving many sectors to unprecedented levels. However, companies that have linked layoffs to this emerging technology have not seen uniformly positive outcomes. CNBC recently examined a collection of 23 S&P 500 companies across various sectors, focusing on those that explicitly mentioned AI when announcing job cuts. As of mid-May, 13 of those companies—approximately 56%—experienced declines in their stock prices following these layoffs. On average, their shares fell by around 25%.
For example, Nike announced nearly 800 job reductions in January, attributing the cuts to plans for enhanced automation in its U.S. distribution centers. By May 15, its stock had dropped nearly 35% since the layoff announcement. Similarly, Salesforce, which let go of 4,000 employees last September in favor of its AI-driven customer service bots known as "Agentforce," saw a decline of about 32% in its stock value since the layoffs were announced.
Fiverr also made headlines in late 2022 when it laid off 30% of its workforce to transition into an "AI-first company focused on efficiency." The firm's stock has since plummeted by 54%. This small sample size highlights a troubling trend: investors are uncertain about how to assess AI's true impact, even as its adoption grows more widespread. Daniel Keum, an associate professor at Columbia Business School, described AI as a "macro shock," emphasizing the uncertainty surrounding its mid- to long-term effects. He noted that while companies often promote various benefits of AI, its primary use has been to reduce labor costs—a situation that could lead to a competitive disadvantage if all rivals are pursuing similar strategies.
Concerns are mounting around the perception that AI may be a convenient scapegoat for job cuts. Estimates suggest that at least 112,000 jobs have been lost due to AI adoption since early 2025, with a study from MIT indicating that AI could perform tasks associated with about 11.7% of the U.S. labor market, possibly saving companies up to $1.2 trillion in wages across different sectors. However, investors are challenged to determine whether companies are genuinely leveraging AI or merely using it as a pretext for traditional cost-cutting measures. This phenomenon, dubbed "AI washing," reflects how businesses may exploit the current media narrative to justify layoffs, as noted by Ally Warson, a partner at AI-focused venture capital firm UP.Partners.
In addition to AI's direct impact, other significant geopolitical and macroeconomic factors also influence these layoffs. Events such as the ongoing war in Iran and tariff pressures from the previous administration have added to the incentive for companies to cut costs, leading to a complex environment where the full implications of AI remain uncertain.
In light of these variables, investors are beginning to seek broader indicators of how AI might enhance corporate profitability beyond just workforce reductions. Noah Hamman, CEO of AdvisorShares, remarked that mere job cuts will not suffice; stakeholders are also analyzing company spending and investment strategies to identify those likely to yield substantial returns. He pointed to Google—owned by Alphabet—as a success story, noting how its generative AI tool, Gemini, has positively impacted cloud revenue, enhanced search capabilities, and increased user engagement within its ecosystem.
