Artificial intelligence has brought about a bull market in stocks, lifting the entire market to new heights. But companies that have combined layoffs with new technology haven’t always fared well.
CNBC compiled a list of 23 S&P500 Companies across multiple sectors and industries saw how their stock prices performed after AI-related layoffs. Specifically, we looked for companies that explicitly mentioned artificial intelligence or hinted at expanding their use of artificial intelligence when announcing job cuts.
As of May 15, 13 of these companies, or 56%, have been in the red since the time they announced the layoffs. Companies whose stock prices fell after cutting AI-related jobs had an average decline of about 25%.
shoe giant nike cut about 800 employees in January, citing plans to accelerate the “automation” of its U.S. distribution centers. As of May 15, the company’s stock price has fallen nearly 35% since the time of the layoffs.
Similarly, sales force The company is down about 32% since news of AI-powered layoffs became public late last summer. The customer relationship management company cut its workforce by 4,000 in September, noting that a team of AI-powered customer service bots called Agentforce replaced some support engineers.
CRM 1 year chart
Later that month, online marketplace fiber CEO Misha Kaufman said the company has laid off 30% of its staff and has also reduced the size of its team to become a “leaner, faster, AI-first company with a modern technology infrastructure centered around AI.” The stock price has fallen 54% since then through May 15th.
Although the sample size is small, this data highlights an uncomfortable reality. Despite the growing use of the technology, investors don’t know what to make of AI and its potential impact, Daniel Keum, an associate professor of business administration at Columbia Business School, told CNBC.
“AI is a kind of macroshock,” Kumu said. “There’s a lot of uncertainty about what that will be. … No one knows exactly what the medium- to long-term impact will be.”
What is certain is that AI is used to reduce labor costs in the “vast majority” of cases, he said, despite the technology’s manufacturers touting other uses.
“Increasing productivity is zero-sum. So, yes…I’m using new technology to reduce staff…but my competitors are doing the same thing,” Keum said. “If everyone is improving in some way, the baseline is just changing, and no one is making more money.”
Is it because of AI?
As AI has gained buzz, so has the idea that companies can use this technology to reduce jobs and reduce costs.
According to one estimate, at least 112,000 jobs could be lost to the introduction of AI starting in early 2025. The Massachusetts Institute of Technology also found in a study published in November that AI could already fill 11.7% of jobs in the U.S. labor market and save companies $1.2 trillion in wages across a variety of sectors.
But Ally Warson, a partner at AI-focused venture capital firm UP.Partners, says investors are having a hard time determining whether companies are really making decisions based on AI or are just using the technology as a way to cut costs and explain old-fashioned balance sheet failures.
This concept has become so interesting to investors and other members of the public that it even has a name: “AI washing.”
“Companies can use media content and commonly accepted narratives to hide why they are firing or not firing employees,” Warson told CNBC.
Keum said investors are also struggling with how to measure the impact of AI on companies, as several geopolitical and macroeconomic issues are also weighing on stock prices.
Kumu said “huge geopolitical shocks” such as the Iran war are leading to layoffs, while tariffs announced by President Donald Trump last year have increased pressure to cut costs. Also, the easing of overemployment during the pandemic era is still having an impact.
“And therein lies the real impact of AI,” Kumu said. “How many of each cause there are… is anyone’s guess.”
“Reducing headcount alone is not enough.”
Amid this uncertainty, investors are looking beyond layoffs to other ways AI can boost profits, said Noah Haman, CEO and founder of investment management firm AdvisorShares.
“Reducing headcount alone is not enough,” Hamann said. “People… are looking at what[companies]are spending and trying to figure out who is actually going to get a successful return on all those investments.”
Investors singled out Google, which is owned by a publicly traded company. alphabetas an example of a company that is powering its business with AI. He noted that the company’s generative AI tool Gemini has contributed to cloud revenue, powered search, and increased user engagement across the Google ecosystem.
Google 1 year
Warson, who invests in physical AI startups, said the emerging technology also focuses on robotics designed for manufacturing, industrial and construction companies. These robots could streamline dangerous tasks like cleaning windows or inspecting wind turbines, reducing costly workplace injuries and boosting companies’ bottom lines.
However, one thing is clear. That said, layoff announcements related to heavy use of artificial intelligence may not be enough to boost a company’s stock price, at least in the long run.
