Shafaqna English- Although artificial intelligence has helped drive broader market optimism, companies that announce AI-related layoffs do not necessarily see their stocks rise. According to CNBC’s review of 23 firms, 13 companies — or 56% — were trading lower after such announcements, with losing stocks falling by an average of about 25%, according to Economist.
Examples include companies like Chewy, whose shares dropped nearly 35% after it cut about 800 workers while expanding automation, and Salesforce, which fell about 32% after saying its AI system had replaced some support engineers. Fiverr also lost 54% after laying off 30% of staff as part of an “AI-first” strategy.
Experts say investors remain uncertain about what AI really means for long-term profitability. In many cases, AI is mainly being used to cut labor costs, but if competitors do the same, the advantage may disappear. Analysts also warn that some firms may be engaging in “AI washing” — using AI as a convenient explanation for traditional cost cutting or broader business problems.
Investors are increasingly looking beyond layoffs to judge whether AI can create real revenue growth, efficiency, or stronger business models. Examples such as Google’s Gemini and AI-powered industrial robotics suggest that markets reward practical gains more than job cuts alone.
The takeaway: announcing layoffs in the name of AI may reduce costs, but it is not enough by itself to convince investors or sustain stock gains.
Source: Economist