Companies are benefiting from AI-driven layoffs

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There was a time not long ago when a CEO would announce mass firings to the dismay of investors. But these days, with cheaper generative AI replacing the more costly humans, it’s become a point of pride for CEOs—and a reason for shareholders to celebrate. The latest example is Salesforce CEO Marc Benioff telling The Logan Bartlett Show podcast about cutting 4,000 customer service jobs thanks to the type of AI that Matthew McConaughey and Woody Harrelson seemingly can’t function without. In June, Benioff said that AI is doing 50% of the work at Salesforce. Yesterday, the slimmed-down company reported a Q2 double beat on revenue ($10.24b vs. $10.14b) and EPS ($2.91 vs. $2.78), although weaker guidance for Q3 sent the stock tumbling after hours. It’s a feature, not a bug There’s no shortage of companies leveraging AI to remain profitable, to the delight of (non-Salesforce) investors: Wells Fargo’s CEO has touted trimming its workforce for 20 straight quarters. Its stock is up 228% over the past five years. Bank of America CEO Brian Moynihan wasn’t hiding it during a recent earnings call when he said the company has let go of 88,000 employees over the past 15 years. BofA stock is up 95% since 2020. Amazon, with its share value up 28% over the past year, recently told staff that AI implementation would lead to layoffs. Microsoft has cut 15,000 jobs in the past two months as the company pivots to AI—and its stock is also up since the beginning of July. Zoom out: Per HR Dive, 34% of CEOs plan to enact layoffs in the next 12 months, the fifth straight quarter that number has risen. Molly Kinder, a senior fellow at Brookings, whose expertise is in AI and the present and future of work, told the WSJ: “I don’t think that’s good news for the American worker.”—DL