Why AI-fueled layoffs will backfire

RIGHT NOW thereseemtobeonly two types of business headlines: Those dedicated to the eye-popping investments and valuations of the ever-expanding AI boom, and those chronicling a stream of layoff announcements. Strikingly, you'll often see the same company names appearing in both.

- By Gautam Mukunda

It makes sense, I suppose. Employers in thrall to the possibilities of this powerful new technology are betting it will drive productivity — meaning fewer humans are needed. (And the post-layoff stock bump doesn’t hurt.) But ultimately, many of these cuts will likely prove unwise. In fact, they may undermine the very thing companies are so focused on: the ability to use AI to its fullest potential.

If the current downsizing is indeed a mistake, it’s one a lot of employers are making: Last month, US companies made more job cuts than they have in any October for the last two decades. Meanwhile, many of the companies involved look healthier than ever. Amazon.com, Inc., which has announced plans to shed as many as 30,000 corporate jobs, is enjoying record-high share prices, while Microsoft, which is undertaking its biggest layoffs in two years, recently reported a 12% increase in profit.