AI-related layoffs a boost for stocks? Not necessarily
AI adoption has been linked to significant job losses, with estimates suggesting at least 112,000 jobs lost since 2025 due to automation. While AI could save companies up to $1.2 trillion in wages, investors remain skeptical about whether firms are genuinely leveraging AI or using it to justify cost-cutting. Factors like geopolitical tensions, tariffs, and post-pandemic adjustments further complicate the assessment of AI's true impact on employment and stock performance.
- ▪An MIT study found AI can perform 11.7% of U.S. labor market jobs and save $1.2 trillion in wages.
- ▪Since 2025, at least 112,000 job losses have been attributed to AI adoption.
- ▪Investors are wary of 'AI washing,' where companies use AI as a justification for layoffs unrelated to the technology.
- ▪Geopolitical events like the Iran war and Trump's tariffs have contributed to cost-cutting and layoffs.
- ▪Post-pandemic over-hiring corrections also continue to influence current workforce reductions.
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As AI has attracted buzz, so too has the idea that companies could use the technology to eliminate jobs and otherwise cut costs. By one estimate, at least 112,000 jobs losses can be tied to AI adoption since the start of 2025. In a study it released in November, the Massachusetts Institute of Technology found in that AI can already do the job of 11.7% of the U.S. labor market and save companies as much as $1.2 trillion in wages in a variety of sectors. However, investors have struggled to discern whether firms are truly making decisions informed by AI or simply using the technology as a way to explain away old-fashioned cost cutting or balance-sheet blunders, according to Ally Warson, founder of AI-focused venture capital firm UP.Partners.
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