Cutting workers used to be a quick way to make Wall Street happy. Then companies started saying the cuts were because of AI, and the stock reaction flipped.
CNBC tracked 23 S&P 500 firms that explicitly tied layoffs to AI or to bigger AI use, and as of May 15, 13 of them - about 56% - were trading lower than the day they announced the cuts.
For the group that dropped, the average decline was around 25%. That is a steep number for a market that has been hitting record highs on the broader AI story.
Nike cut nearly 800 distribution workers in January and pointed to "automation" at its U.S. centers, and the stock is off about 35% since. Salesforce cut 4,000 workers in September 2025 and credited its Agentforce AI bots with replacing some support engineers, and the stock is down roughly 32%.
Fiverr laid off 30% of its staff to become an "AI-first" company, and shares have fallen 54% from that announcement.
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The puzzle, per Daniel Keum, associate professor of management at Columbia Business School, is that nobody can yet measure what AI does to a business in clean numbers. He called AI a "macro shock" with uncertain mid- and long-term effects.
Keum's other point is even tougher for the bull case. If every company uses AI to cut costs, the gain cancels out, with the whole industry shifting down at the same time so nobody comes out ahead.
There is also a trust problem. Ally Warson, partner at AI-focused VC firm UP.Partners, told CNBC that companies use whatever is in the media to explain layoffs - a practice investors have started calling "AI washing."
Investors have noticed, and the price action is telling.
It is not just AI that is weighing on these names. Trump's tariffs from last year keep pressuring margins, while the Iran war has driven up costs and triggered its own layoffs.
There is also the unwind of pandemic-era over-hiring still working its way through corporate America. By one estimate, at least 112,000 job losses can be tied to AI adoption since the start of 2025, and an MIT study released in November found AI could already do the work of 11.7% of the U.S. labor market.
There is a bright spot in the data, with companies seen as using AI to grow revenue, not just to shrink payroll, doing better. Investors keep pointing to Alphabet, where Gemini is showing up in cloud revenue, search, and user activity across Google's apps.
A press release with the word "AI" in it is no longer enough to lift a stock.
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