According to a study, AI layoffs no longer boost stocks as investors become doubtful
Investors Turn Negative on AI-Linked Layoffs as Market Sentiment Shifts
Layoffs have been widespread this year, especially in the technology sector, but investors are no longer reacting positively to job cuts — even when companies blame artificial intelligence or efficiency drives.
According to a report by Goldman Sachs, layoff announcements are now being seen as a negative signal by markets. In the past, such announcements often boosted share prices because investors expected lower costs and higher profits. This year, however, companies announcing layoffs have seen their share prices fall by an average of 2%, with firms citing “restructuring” facing even sharper declines.
The shift reflects growing scepticism among investors. Goldman Sachs found that companies announcing layoffs tend to have higher capital spending, rising debt and interest costs, and weaker profit growth compared with peers. This suggests that layoffs are increasingly viewed as a response to financial pressure rather than a sign of efficiency or successful AI adoption.
As quoted by Fortune, the analysts noted that markets now see layoff announcements as a negative signal about a company’s future prospects, despite management presenting them as strategic or technology-driven decisions.
The change in sentiment comes even as many executives publicly highlight AI-driven productivity gains. For some leaders, including Amazon CEO Andy Jassy, talking openly about AI replacing certain tasks has been a way to signal commitment to automation and innovation.
Despite investor caution, layoffs are unlikely to slow. Goldman Sachs expects a possible rise in job cuts through the rest of the year, as companies continue trying to reduce costs. Reporting by The Times of India suggests many firms still plan to use AI to lower labour expenses.
A separate survey cited by The Wall Street Journal indicates that AI-related job losses could accelerate in 2026. In a poll of 90 chief marketing officers conducted by Spencer Stuart, more than one-third said they expect layoffs over the next 12–24 months as computer-driven tools expand. Nearly half of executives at companies valued above $20 billion said they are planning major workforce reductions.
The expected cuts are concentrated in roles such as copywriting, graphic design, social media, data analysis and public relations.
Still, some companies are reassessing how far automation should go. Klarna chief executive Sebastian Siemiatkowski, who had previously promoted replacing workers with AI, recently lifted a hiring freeze, saying that maintaining a human touch is “critical” to protecting the company’s brand.
Overall, while AI continues to reshape workplaces, investors are increasingly wary of layoffs framed as efficiency gains, viewing them instead as warning signs of financial stress.
