AI layoffs no longer cheer markets as investors turn sceptical, says study
Layoffs have been widespread this year, especially in the tech sector, with companies often blaming restructuring or efficiency drives. Gone are the days when cutting jobs, particularly in the name of artificial intelligence (AI), was seen as a positive move by the stock market.
A report from Goldman Sachs analysts shows that layoffs, even when linked to automation or technological efficiency, are now being viewed far more negatively by investors.
In the past, layoff announcements often pushed share prices higher, as investors expected lower costs and better profit margins. But Goldman Sachs found that more recent announcements have led to an average share price fall of 2%. Companies that blamed “restructuring” were hit even harder.
Why are investor sentiments changing?
This is because investors are no longer convinced by the explanations companies are giving, according to the report. Goldman Sachs found that firms announcing layoffs this year have seen higher capital spending, rising debt and interest costs, and weaker profit growth than similar companies in the same sectors.
Quoting the analysts, Fortune said, “This suggests that, despite the benign justifications offered, the equity market has perceived recent layoff announcements as a negative signal about these companies’ prospects.”
In other words, investors increasingly believe that “AI restructuring” is often a cover for urgent cost-cutting caused by falling profitability.
This shift is notable given that talking openly about layoffs and boasting about how much work AI now does has become fashionable in recent months. For some chief executives, particularly in tech, such as Amazon CEO Andy Jassy, it has been a way to signal full commitment to AI.
Does this mean layoffs are over?
Despite the market’s cooler response, Goldman Sachs expects a “potential rise” in layoffs through the rest of the year. According to The Times of India, comments from recent earnings calls suggest that many firms still plan to use AI to reduce labour costs, even as investors question their motives.
A new survey reported by The Wall Street Journal said that job losses linked to AI could accelerate in 2026. In November, executive search firm Spencer Stuart surveyed 90 chief marketing officers. More than one in three said they expect layoffs in the next 12 to 24 months as more computer agents are introduced.
The outlook is even tougher at larger companies. Nearly half of executives at firms valued at over $20 billion said they plan major job cuts. The survey focussed mainly on marketing roles, including copywriters, graphic designers, social media managers, data analysts, and public relations staff.
However, there is still hope. Some leaders are rethinking the balance between AI and people. For instance, Klarna chief executive Sebastian Siemiatkowski, who once strongly promoted AI replacing workers, recently reversed a hiring freeze. He said keeping a human touch is “critical” to protecting the brand.
A report from Goldman Sachs analysts shows that layoffs, even when linked to automation or technological efficiency, are now being viewed far more negatively by investors.
In the past, layoff announcements often pushed share prices higher, as investors expected lower costs and better profit margins. But Goldman Sachs found that more recent announcements have led to an average share price fall of 2%. Companies that blamed “restructuring” were hit even harder.
Why are investor sentiments changing?
This is because investors are no longer convinced by the explanations companies are giving, according to the report. Goldman Sachs found that firms announcing layoffs this year have seen higher capital spending, rising debt and interest costs, and weaker profit growth than similar companies in the same sectors.
Quoting the analysts, Fortune said, “This suggests that, despite the benign justifications offered, the equity market has perceived recent layoff announcements as a negative signal about these companies’ prospects.”
In other words, investors increasingly believe that “AI restructuring” is often a cover for urgent cost-cutting caused by falling profitability.
This shift is notable given that talking openly about layoffs and boasting about how much work AI now does has become fashionable in recent months. For some chief executives, particularly in tech, such as Amazon CEO Andy Jassy, it has been a way to signal full commitment to AI.
Does this mean layoffs are over?
Despite the market’s cooler response, Goldman Sachs expects a “potential rise” in layoffs through the rest of the year. According to The Times of India, comments from recent earnings calls suggest that many firms still plan to use AI to reduce labour costs, even as investors question their motives.
A new survey reported by The Wall Street Journal said that job losses linked to AI could accelerate in 2026. In November, executive search firm Spencer Stuart surveyed 90 chief marketing officers. More than one in three said they expect layoffs in the next 12 to 24 months as more computer agents are introduced.
The outlook is even tougher at larger companies. Nearly half of executives at firms valued at over $20 billion said they plan major job cuts. The survey focussed mainly on marketing roles, including copywriters, graphic designers, social media managers, data analysts, and public relations staff.
However, there is still hope. Some leaders are rethinking the balance between AI and people. For instance, Klarna chief executive Sebastian Siemiatkowski, who once strongly promoted AI replacing workers, recently reversed a hiring freeze. He said keeping a human touch is “critical” to protecting the brand.
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