Tech
The AI Layoff Wave: A Powder Keg of Inequality
AI Summary
The tech industry is experiencing a surge in layoffs, with over 150,000 people affected so far this year, citing AI as the reason. However, there is growing skepticism that AI is the real culprit, and that it's being used as a convenient cover story for pandemic-era overhiring.
The AI Layoff Wave
Something strange is happening in tech right now. Companies are posting record profits and revenue while laying off tens of thousands of people, citing AI as the official explanation. So far this year, there have been an estimated 363 layoffs at tech companies, affecting nearly 150,000 people — a pace of about 974 people per day, 44% faster than last year — according to TrueUp, a tech job board and recruiting platform.The Layoff Numbers
- Tech layoffs hit their highest single month in two years last month, with nearly 40,000 cuts.
- AI was the most-cited reason for layoffs across every industry for the third month running, according to outplacement firm Challenger, Grey & Christmas.
The Skepticism
There’s growing skepticism that AI is really the culprit, though — that it’s more of a convenient cover story than the actual cause. Few examples illustrate the pushback better than what happened at Block earlier this year. After getting hammered over laying off nearly half of Block earlier this year, citing AI as the reason, Jack Dorsey denied the cuts were a sign of trouble at the payments company.The Data Analysis
- Early last month, AI chipmaker Cerebras Systems closed its first day on the Nasdaq up 68% from its $185 IPO price, giving the chipmaker a market cap of roughly $67 billion — the largest US tech IPO since Snowflake’s 2020 debut.
- SpaceX meanwhile went public on Friday and enjoys, as of this writing, a $2.1 trillion market cap, turning Musk into a paper trillionaire and potentially minting an estimated 4,400 millionaires, and around 400 centimillionaires in the process.