Bursting at the Seems

The market has managed to take in stride things like massive regional wars, Constitutional crises, attacks on law and order, illegal tariffs, and the cracking of the foundation that underpins the modern global order. Even with all these factors at play, nothing moves the market like AI news. For a while, that meant that any press release indicating a company was digging deeper into AI led to a share price boost. More recently, many of the bigger movements have been reactions to the threat posed by AI. The Saas-pocalypse hit many big tech players when investors worried that their functions would be replaced by OpenAI and Anthropic. So tech companies know they have to play the AI market right, and that they have to play the AI news and hype cycle right. And, as is the case with many of the answers you get from LLMs, it can be almost impossible to dissect reality from hallucinations (some of which are intended).At this point, there’s little doubt that the AI revolution will have an outsized impact on white collar jobs, from how they’re done to how many of them will survive. We’re already seeing worrying signs in the job market. But we’re also seeing signs that corporate CEOs looking to lighten costs via layoffs might use the emergence of AI as an excuse for doing so. This can play as good news in the investment world, which loves lowering costs through layoffs and loves any signal that a company is becoming an AI company. Thus, telling the market you’re preemptively laying off thousands of employees and replacing them with AI can create a perfect storm for a company’s share price. For employees, it’s more of a shitstorm. Aaron Zamost, a former employee of Block, examines that company’s recent layoffs made in the name of AI, and what they might mean for both the future of public companies and the stories they spin. “Look closer at specific cuts — like shrinking the policy team and eliminating diversity and inclusion roles, former colleagues told me — and Block’s latest reorganization reads like standard prioritization and cost management, not an A.I.-driven reinvention … Fear that the A.I. tsunami will destroy the traditional software field has led investors to pummel the valuations of long-established companies like Salesforce and Adobe. Like those businesses, Block is not an A.I. company. It is a financial services tech business, and it understandably wants to avoid ‘software dodo’ extinction before it comes for its industry. In that respect, A.I. is both a story line and a survival strategy.” NYT (Gift Article): I Worked for Block. Its A.I. Job Cuts Aren’t What They Seem. Of course, in the market, news is like stock shares. The only thing that matters is what investors buy. And they bought Block’s story. “Wall Street rewarded Block handsomely, sending the company’s stock up 24 percent after the announcement. That incentivizes the rest of corporate America to follow Block’s lead and announce traditional layoffs while playing the A.I. card. I’m sure it will.”