Job cuts dominated corporate headlines in 2025, but investors are no longer cheering when companies blame layoffs on artificial intelligence.
Analysts at Goldman Sachs say Wall Street sentiment has shifted. Firms announcing layoffs are now facing market penalties, even when those moves are presented as part of AI adoption or automation plans.
A recent report from Goldman Sachs shows that companies announcing layoffs saw their stock prices fall by an average of 2%. Businesses that described the cuts as “restructuring” faced even sharper declines. This marks a clear break from earlier trends, when layoffs were often rewarded with short term stock gains due to expectations of lower costs and higher margins.
Goldman analysts noted that investors are growing skeptical of the messaging used by executives. “This suggests that, despite the benign justifications offered, the equity market has perceived recent layoff announcements as a negative signal about these companies’ prospects,” the analysts wrote.
In simple terms, investors increasingly believe that claims of “AI restructuring” may be covering deeper financial stress rather than reflecting smart long term strategy. This signals a pullback from the earlier wave of what analysts called “efficiency flexing.”
Several corporate leaders have promoted AI as a way to reduce future hiring needs. Executives such as Amazon’s Andy Jassy and JPMorgan Chase’s Jeremy Barnum have publicly discussed how automation could limit workforce growth. However, the idea of running businesses with minimal human involvement is already showing cracks.
A recent report highlighted Klarna chief executive Sebastian Siemiatkowski, who had earlier said AI could replace workers but later reversed a hiring freeze. He admitted that maintaining a human touch is “critical” to brand strength, suggesting that full automation has limits.
Despite investor discomfort, Goldman Sachs does not expect layoffs to stop in 2026. The firm predicts a “potential rise” in job cuts through the rest of the year. Earnings call commentary shows many companies still plan to use AI to lower labor costs, even as markets question the approach.
Another Goldman Sachs analysis, led by senior economist Ronnie Walker, reviewed third quarter earnings commentary across nearly the entire S&P 500. It found that while AI has not yet been clearly linked to broader job losses across the economy, companies that heavily discussed AI have sharply reduced job openings in recent months. The study also noted that a clear connection between AI exposure and overall labor market outcomes has yet to be proven.
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