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Tech companies are firing everyone to "fund AI", spending money on each other
- estimator7292 1y agoI've been wondering for a long time what the end stage of this current trend of capitalist self-cannibalization is going to look like. I'm not terribly surprised.
- noir_lord 1y agoFrom a company point of view, collapse and rebirth - when large companies fail they often end up spinning off lots of little companies some succeed, some fail and some massively succeed and the cycle repeats. Someone will get left holding the bag because someone always gets left holding the bag - often lots of someones.
- Buttons840 1y agoThese are AI companies though, we cannot let them collapse. They will receive bailouts from the US taxpayer, they will not break up. If the US loses its tech companies, what economic advantage does it have left? Tech companies are literally the last crown jewel in America's crown; all the rest have fallen out and gotten lost.
- spcebar 1y agoThe exciting AI ending. When all the companies selling boondoggles fire their employees, who is left with money to buy the boondoggles?
- tim333 1y agoSingularity, merge, Kardashev 2+.
- heywintermute 1y agoThe circular financing of AI spend isn't exactly a new story. Pretty sure even Altman has publicly said it's bubble
- dragonwriter 1y agoWe’re in a general economic decline masked, in some key aggregate measures, by the AI bubble. That’s the reason for the job cuts. Shuffling money around between AI adjacent companies may (but I doubt it) be enough to keep the AI bubble going through the downturn, in which case stockholders in those key companies manage to ride it out without pain, and executives too because they serve their constituency well. More likely, it just delays the reckoning.
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- ailegalbeagle 1y ago> general economic decline I'm not seeing it, do you have any proof you can offer that your statement is true?
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- Herring 1y agohttps://www.ey.com/en_us/insights/strategy/macroeconomics/us-gdp https://www.ey.com/en_us/insights/strategy/macroeconomics/us... https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/on-the-minds-of-investors/is-ai-already-driving-us-growth/ https://am.jpmorgan.com/us/en/asset-management/adv/insights/... EY forecasts 1.7% GDP growth, most of which is AI (~1.1% according to jpmorgan). The broader economy is facing headwinds (policy uncertainty, tariffs, etc etc).
- ailegalbeagle 1y agoThe signs point to a mixed picture, not a general economic decline.
- Herring 1y agoEY says > Overall, underlying economic momentum remained steady in the first half of the year despite mounting policy headwinds. But with the impact of tariffs and policy uncertainty becoming increasingly visible, slower US growth and higher inflation are still on the horizon. Trump inherited a good economy and set it towards decline. If that's still not clear stay tuned, there's more to come.
- ghaff 1y agoBoth "everyone" and "to fund AI" are doing a lot of work there. There probably was a lot of hiring in excess of requirements in tech over the past five years or whatever--and a bunch of people who jumped on board the ship primarily to capitalize on the gold rush are going to end up suffering as a result. Doesn't mean that tech generally isn't still a big opportunity going forward but may very well mean that outsized tech money opportunity on the west coast of the US declines. (And cost of living declines will lag) It's happened before with respect to the other coast (and the Midwest to some degree).
- Jcampuzano2 1y agoWhile there are points here that I agree with, I do not agree with the premise that they are firing people to fund AI. Funding of AI (keyword funding, not usage) I would say is an adjacent relation, but not the reason people are being let go. I think it's a combination of factors including: - Overhiring in the past, most of these companies were/are still employing way above the pre-pandemic numbers when overhiring was the norm. Many of these companies legitimately probably have more people than they need still. - No matter what you think, AI is certainly already capable of improving productivity enough to make up for many of the jobs lost. Just look at how much AI can do today compared to even just a couple years ago. Practically every engineer who is worth their salt can put out way more than they previously could. Yes there is the question of quality and whether that's going to keep up, but you simply cannot argue at this point that AI is not able to increase productivity enough for the decreased headcount. Theres a reason junior hiring has fallen, they expect senior engineers to both output more using AI and to have the capability of effectively reeling it in and reviewing. - As much as I hate to say it because it gets people angry and political: offshoring. Every company that I've worked on or worked at in the last few years has increased headcount of offshore employees and contractors. - And lastly is simply expectations. Executives can see that other companies that have let go of people are able to still effectively run much slimmer.
- dboreham 1y agoElon wrote "The Mythical Man Month" 21thC edition..
- soared 1y agoThe poster is kind of missing the point. If I see a tool that could make a lot of my employees 20% more efficient today, and maybe more than that in the future, I’m going to bet big on it. Layoffs aren’t just to “fund AI” - layoffs (a) always happen and (b) likely genuinely make sense at some scale due to efficiency gain from AI. It’s not “cut employees, send they money in circles to prop up stock prices” it’s “cut employees, like we always do (but more than usual since we have actual AI efficiency gains).” Separately, let’s yeet excess money in circles to prop up our stock price and AI is a great hype cycle vehicle for that. Yeah layoffs always suck, especially big ones, but they literally always happen and IMO are not caused by AI circlejerking at the c level. Also, for anyone curious about “AI gains”. In my role at bigtech company I need to have a high/medium level understanding of like 30 products and teams. LLM summaries of docs, tickets, slack, etc mean I can get a basic understanding and history of any topic in seconds, rather than spending hours reading all those sources. My role is not unique or special
- sifar 1y agoCurious, how do you deal with hallucinations for important stuff ?
- soared 1y agoWe use llms more for finding the correct doc, and then actually reading the doc ourselves. It’s really just a very good search and summarization tool for when there are tens of thousands of potentially relevant docs
- alephnerd 1y agoDoesn't pass the smell test as someone who has been on boards that made these decisions. This would be like saying cloud spend was circular because F1000 tech companies represent the majority of cloud spend from a revenue perspective, but tend to sell or partner with those same organizations. For example, AWS and Zscaler, or GCP and Broadcom. Reality is, a lot of product lines were formed or overhired with little-to-no business justification during the late 2010s and early 2020s. Most of us are now cleaning shop and axing those product lines and features that cannot be attached to tangible revenue generation. Inevitably this leads to ICs getting axed. If you want to blame someone, blame EMs, PMs, Principal SWEs, and VPs who decided to launch product lines and features for their resume instead of for business justification. (Edit: that said, BeFlatXIII is right that we probably won't have hired most people if this didn't happen at all) Additionally, comp expectations just got too high - most new grads are not worth $150k-200k TC (some absolutely are though)
- shermantanktop 1y agoAgree with a lot of this. But on the last point, that’s the “blame middle management” theory. And I have seen outrageous, florid displays of exactly that behavior in those ranks. But the CEOs have been there all along, doing the math on ZIRP and getting caught up in FOMO. They could have tightened their belts at any time, or demanded better justifications for investments. Why didn’t they?
- alephnerd 1y ago> But the CEOs have been there all along, doing the math on ZIRP and getting caught up in FOMO. They could have tightened their belts at any time, or demanded better justifications for investments. Why didn’t they? Because the job of a CEO is not to micromanage. The whole point of hiring middle management is to keep CEOs out of micromanaging decisions. The job of C-suite is to 1. Be the arbitrator between different orgs 2. Be the primary salesperson - a large portion of corporations will not purchase without a CEO or CTO being in the same room and giving the same promises 3. Manage investor and board relations We (c-suite, boards) give middle management significant autonomy to shape roadmaps and organizational structure explicitly because we assume they are adults as well. Some amount of lossage and BS is expected, but the kind of financial slack that existed a couple years ago to cushion these blows doesn't exist anymore.
- Apocryphon 1y agoFeels like the actual AI behind the workforce reductions is Ascended Interest (rates).
- rr808 1y agoAre the layoffs devs? When there are 30k people I assume its warehouse workers.
- bjtitus 1y ago"Corporate job cuts" https://www.reuters.com/business/world-at-work/amazon-targets-many-30000-corporate-job-cuts-sources-say-2025-10-27/ https://www.reuters.com/business/world-at-work/amazon-target...
- lateforwork 1y agoThe "spending money on each other" part is untrue. It is mostly going in one direction, towards Nvidia, and that's the reason they crossed $5 Trillion in market cap recently.
- alephnerd 1y agoAlso Broadcom - most enterprises with significant ML compute needs are working building their own custom ASICs, and it's Broadcom that owns the entire custom market.
- simonw 1y agoI found John Gruber's roundup of tech company profits (not revenue) interesting: https://daringfireball.net/linked/2025/10/30/apple-q4-results https://daringfireball.net/linked/2025/10/30/apple-q4-result... - Google (a.k.a. Alphabet): $35B - Microsoft: $27.7B - Apple: $27.5B - Nvidia: $26.4B - Amazon: $21.5B
- verzali 1y agoIs it a coincidence that 3 of 5 are so close?
- dmoy 1y agoPretty much coincidence, yes
- NaomiLehman 1y agoYes, completely different revenue sources.
- BerislavLopac 1y agoMANGA is the new FAANG.
- mixmastamyk 1y agoJust use BigTech, then you don't have to keep shuffling letters nor inserting Netflix to prevent it becoming a slur. https://en.wikipedia.org/wiki/Big_Tech https://en.wikipedia.org/wiki/Big_Tech
- webdoodle 1y agoI remember watching the firings of people right before the dot com bubble burst. Instead of pay employee's, companies thought they could double down and started putting MORE money into vaporware companies that eventually folded up and went bankrupt. I'm guessing were almost to that last stage again...
- firefoxd 1y agoMost companies using AI are just paying for a subscription. They aren't actually building LLMs or other machine learning applications that take over a known task. You could easily replace the term AI with just subscription. When they say they are laying off workers, they are saying "we signed up for Cursor, and enabled some AI features on Jira and Salesforce" The layoff is just an excuse until they realize that just because Jira can write a summary of the ticket, doesn't mean the ticket gets done any faster.
- GolfPopper 1y agoAnd keep in mind that while the company may care about its overall efficiency, its individual organs only care about their internal incentives. If the LLM gets the ticket out of someone's area of responsibility faster, why do they care if that makes it harder for someone else?
- sublinear 1y agoThe AI doesn't make anything harder for the people downstream. If anything it gives all the people downstream more power. The power to justifiably ignore the AI summary and do whatever they originally wanted as they see fit. This makes the people upstream even more obviously redundant than they already were before all the AI slop. The downstream people picking up the slack are effectively promoted. This is pretty much the definition of a layoff. It's just a different and much more streamlined way this time to weed out the losers. The top AI users within an organization hang themselves by proving they're not needed. The system works.
- CharlieDigital 1y agoI rarely post comments on LinkedIn, but I saw some of the dumbest content today and felt compelled to leave a response: > Just met a founder who fired his entire team because he was able to individually beat their entire productivity with Claude Code My only thought when I read this is that this absolutely embarrassing...for founder who wasted dozens of hours recruiting, qualifiying, interviewing, onboarding, and training these resources. Then paying their salaries for who knows how long! It just came across as some of the most small-brain thinking that anyone would then "Like" this content and not see it for what it is: idiotic management and leadership and just complete lack of basic foresight. Why are you hiring absolutely replaceable people in the first place?
- jvanderbot 1y agoBest part: now the ceo can't hire because he's too busy building and debugging agents
- mjr00 1y ago> It just came across as some of the most small-brain thinking that anyone would then "Like" this content and not see it for what it is: idiotic management and leadership and just complete lack of basic foresight. It's not even that. It's just straight up lying. The most generous interpretation is that his "team" was Fiverr contractors who were working part-time for $10/hour. More likely is he never had a team to begin with. You can just say things. You can just say that you've unlocked 1000x productivity gains with AI and "agentic processes" and investors and AI boosters are so eager to believe this nobody will bother fact checking it.
- rglover 1y ago100% this. The culture has shifted toward normalizing lying to such a degree that now, most people will stare you in the eye and lie to your face for the sake of self-preservation. Low-trust is now the default, high-trust is a rare luxury. Most people are just demi-Barnum's now (and if they're not, their brain has been so utterly cooked by the spectacle that they may as well be running a scam relative to the lack of actual value they produce).
- zkmon 1y agoThis is turning out to be more wasteful than arms race. Companies are locked into a vicious spiral built by themselves. The only hope appears to be a bubble burst that wakes up investors.
- politelemon 1y agoMicrosoft have Azure, they don't need to rent cloud compute from AWS.
- rapatel0 1y agoThere has never been a better time to build. The vast majority of executives likely don't comprehend AI and it's capability. (I'm not talking about silicon valley) I'm talking about everything else. The highly likely scenario is that: - These people will spend money on "AI" to solve stuff to keep their job - These people will be so slow to respond that they are ripe for disruption/exit.
- bix6 1y agoThe consumption side has so far been held up by higher income consumers. Now that so many of them are being fired all that’s left to prop up the economy is AI spend. I’ve heard some think it could go on for a few more years but I’ve also increasingly seen bubble / circular finance posts so it feels like we’re getting closer.
- layer8 1y agoIt’s quite possible that they’d want to do the layoffs regardless, and the AI narrative just gives them a convenient excuse, with the added bonus that it also happens to promote AI.
- awintr 1y agoYep, layoffs keep the cost of labor down, so if they can do it without affecting what they really care about they will
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- 1970-01-01 1y agoHigh risk, high reward is not a viable long term strategy for anything. Good luck with your AI employees when they botch an update and you're skiing.
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- skybrian 1y ago"Firing everyone" is greatly exaggerated. Google is not at its all-time high, but still pretty close: https://www.macrotrends.net/stocks/charts/GOOG/alphabet/number-of-employees https://www.macrotrends.net/stocks/charts/GOOG/alphabet/numb... Amazon: similar. https://www.macrotrends.net/stocks/charts/AMZN/amazon/number-of-employees https://www.macrotrends.net/stocks/charts/AMZN/amazon/number... Microsoft: all time high? https://www.macrotrends.net/stocks/charts/MSFT/microsoft/number-of-employees https://www.macrotrends.net/stocks/charts/MSFT/microsoft/num... It sucks if you need to find work, but these are still major employers, even after large layoffs. They can lay off thousands without much of a dent. I'm old, I remember when Google was 20k people and I thought that was enormous.
- rsanek 1y agoAgree that "firing everyone" is exaggerated, but what we're seeing now is pretty unique. Headcount increases between 2010~2022 at these companies were around 15~25% CAGR; now, it's at best flat for the past ~3 years. I think that's going to make a pretty big dent.
- babra1 11mo ago[dead]