In the Name of AI, Actually Carrying Out Layoffs: An Exaggerated "Battle Royale"

Writing by: Nancy, PANews

As the AI war becomes more chaotic, human anxiety grows.

With effective accelerationism becoming Silicon Valley’s guiding principle, AI demonstrates astonishing evolutionary speed. The surge of business waves has fueled unemployment fears. Waves of layoffs are happening one after another, from Silicon Valley giants to Chinese tech firms, from traditional finance to crypto markets—AI panic seems to be continuously amplifying.

However, this wave of layoffs is more a delayed reckoning of expansion bubbles under the guise of AI.

The global tech industry is undergoing an unprecedented “big slimming,” and the name AI has become the “legal” justification for this wave of layoffs.

According to British financial research firm RationalFX, in the first quarter of 2026 alone, over 45,000 jobs were cut worldwide in the tech sector, with at least 20% attributed to AI. In comparison, the proportion of layoffs due to AI in 2025 was less than 8%. This trend is accelerating, and the total layoffs for the year are expected to surpass 260,000.

Wall Street was the first to hit the “cut” button. Amazon, Morgan Stanley, Goldman Sachs, JPMorgan Chase, Citigroup, BlackRock, Meta… whether financial giants or tech pioneers, they all launched layoffs simultaneously.

China, also an AI powerhouse, was not spared. Well-known internet giants like Tencent, ByteDance, NetEase, Bilibili, and Baidu have also adjusted their team structures.

The crypto space has also seen an AI-driven wave of layoffs, including projects like Block, Gemini, Crypto.com, and Algorand, which announced scale reductions this year. Notably, Block announced a 40% brutal layoff, citing AI as the reason for changing the meaning of building and operating companies.

Panic is spreading globally. From the apocalyptic narrative of “AI replacing humans” in “The 2028 Global Intelligence Crisis” to AI expert Karpathy’s “AI Career Risk Map” going viral online, this unease is rapidly sweeping the world.

It seems AI is not stopping, and layoffs may continue.

This rapid iteration of AI was first ignited in Silicon Valley.

In Silicon Valley, AI mainly divides into two camps:

Effective Accelerationism (e/acc), a rising philosophical movement that strongly advocates technological development, promoting unconditional acceleration of innovation, even aiming to disrupt social structures;

Effective Altruism (EA), which supports developing and applying technologies that maximize positive social impact while minimizing potential harms.

These two forces operate independently and compete in Silicon Valley.

In effective altruism, well-known crypto figure Sam Bankman-Fried (SBF), founder of FTX, was a high-profile supporter and an early investor in the AI giant Anthropic. However, at the end of 2022, FTX collapsed, and this ideology faced serious skepticism and ridicule.

On the other side, the AI community has Sam Altman, founder of OpenAI, an optimistic figure. Elon Musk, a follower of effective altruism, was one of OpenAI’s co-founders but left due to differences in direction. Altman then secured funding, burned through cash rapidly, and launched the generative AI ChatGPT in 2022. At the time, it was called the fastest-adopted consumer product in history, pushing Silicon Valley toward accelerationism.

During this process, OpenAI also caused a global stir with internal conflicts between accelerationist and safety-oriented routes, culminating in a shocking “palace coup.” Ultimately, Altman won and returned, marking a major turning point in AI development.

Since then, effective accelerationism has become increasingly popular among Silicon Valley elites, guiding their actions. AI has begun full-scale commercialization and large-scale deployment.

Karpathy created a risk score for 342 U.S. occupations, indicating the potential for automation. In this visualization, green represents safe jobs, red indicates high automation risk. Jobs involving digital information processing, such as computer work, score higher; outdoor manual labor and jobs requiring real-world interaction (electricians, plumbers, etc.) score lower. However, a high score doesn’t mean unemployment—just a higher risk of being replaced by AI.

But according to Nvidia CEO Jensen Huang, AI will not cause unemployment; instead, it will boost productivity and create more jobs. Venture capital firm a16z believes history repeatedly shows automation does not lead to permanent mass unemployment; AI is more about augmenting humans than replacing them entirely. Morgan Stanley’s latest report states AI will not cause large-scale permanent unemployment but will change employment structures.

Block’s re-hiring case also supports this view: some of the first laid-off employees have been recalled.

Several Block employees on LinkedIn reported receiving rehire invitations, citing reasons like “clerical errors” and shortages of key infrastructure staff. CEO Jack Dorsey previously admitted that layoffs might have been a mistake, and some laid-off employees believe the layoffs were more about boosting investor confidence than AI-driven replacement.

AI is fueling FOMO and is also seen as a spreading collective anxiety. However, this wave of layoffs appears more like a “delayed correction.”

Recent research by the Oxford Economics Institute indicates that, despite individual cases of AI replacing jobs, macroeconomic data does not support the idea that automation will trigger structural employment changes. Companies seem not to be extensively using AI to replace workers but rather using it as a pretext for routine layoffs.

Compared to admitting to weak consumer demand or overhiring in previous management mistakes, attributing layoffs to AI applications sends a more positive signal to investors.

Laura Ullrich, head of economic research at Indeed, recently said in an interview that this is related to overhiring or hiring booms in the post-pandemic era. CEOs privately acknowledge that their companies are still “overly large and bloated.”

During the pandemic, major economies adopted large-scale easing policies, and online economies expanded rapidly, creating many “special demand” jobs. Many leading companies doubled or even tripled in size during this period, with generous pay raises and aggressive expansion becoming the norm.

However, as the economy gradually normalizes, job demand declines, and rising interest rates, high borrowing costs, and weak consumption slow economic growth. More tech companies are realizing that their past overexpansion has led to redundancies, necessitating slimming down.

The crypto market is similar: pandemic liquidity and low interest rates created a huge bubble, but as liquidity tightened, project survival pressure increased, and ongoing market downturns made layoffs inevitable. Jack Dorsey also admitted that the company overhired during the pandemic.

In summary, today’s large-scale layoffs are not solely triggered by AI but are more a result of economic cycle normalization and market correction. While AI does impact certain jobs visibly, it acts more as a catalyst than the root cause.