This article will be controversial.
I keep seeing posts about AI-driven layoffs that don’t match what I hear in direct conversations. The recent Citrini Research memo pushed me to write this.
I do not conduct quantitative research, but I review reputable studies. What they consistently show is that overall hiring has leveled off and that layoffs have remained limited, depending on the sectors. For example, retail jobs are declining and openings for white-collar roles, particularly in finance, have dropped.
On a recent podcast, Peter Cappelli, professor at Wharton, offered a grounded perspective. Gartner analyzed 1.15 million job eliminations reported between July 1, 2025, and December 31, 2025, and found that fewer than 1% were due to AI.
There is significant AI washing, with layoffs attributed to AI even when the true drivers are different. It is time to stop.
Zooming in on the technology sector, here is what I have been observing over the past few quarters:
Many CFOs moved early in 2025 to curb hiring and boost productivity in response to rising economic uncertainty.
Big Tech layoffs have been dominating the headlines and represent the closest casualty of AI. They are driven by three factors: post-pandemic overhiring corrections, growth slowdowns in large, mature product lines, and cost-cutting to fund their massive AI infrastructure investments.
The restructuring of X under Elon Musk set a precedent. The company went from roughly 7,500 employees before the takeover to fewer than 3,000 (-60%). Revenues fell from $4.4 billion in 2022 to an estimated $2.9 billion (-34%). That reset reinforced a narrative that many software organizations could operate with far fewer employees.
VCs are gravitating toward new startups with high revenue-per-employee potential, setting an aspirational $1M target.
Beyond macroeconomic pressures, the SaaS sector faces sharper investor scrutiny. For years, it operated with deep pockets to grow, while efficiency took a back seat. As growth rates normalize and AI raises questions about long-term potential, investors now expect businesses to drive decisively toward profitability. This has driven, and continues to drive, workforce reductions.
Gartner and Forrester’s latest forecasts align:
In October 2025, Gartner projected AI’s net impact on global jobs to remain neutral through 2026, emphasizing workforce transformation rather than outright displacement.
Looking toward a longer time horizon, Forrester anticipates that automation and AI could account for about 6% of job losses in the United States, equating to roughly 10.4 million roles by 2030.
As 2026 unfolds, I am seeing another market shift. In 2025, the top expectation from AI was headcount reduction. Today, it is shifting to a secondary consideration as enterprises embrace AI as an inevitable way of operating.
AI will unquestionably impact the job market, at minimum driving a massive redefinition of roles. Mid- and long-term predictions remain uncertain, and AI washing only clouds the picture.