AI Layoffs: Why More CEOs Are Taking ‘Corporate Ozempic’

“Company Ozempic.”

That’s how advertising professor and public determine Scott Galloway describes AI.

And simply as some Ozempic customers are shy to disclose they’re taking the drug, many company managers are hesitant to confess they’re utilizing AI to trim their workforce.

As an alternative, we’re getting phrases like “cost-cutting efforts”, “concentrate on effectivity”, and the newest buzzword, “value avoidance.”

However make no mistake – what we’re seeing is a swap-out of human employees for AI/robotics.

Right here’s The Wall Avenue Journal:

Companies are beginning to hyperlink their synthetic intelligence initiatives with paring again hiring plans, or so-called value avoidance, in an effort to justify investing within the know-how…

Price avoidance is an applicable time period, in response to Thomas Bodenski, chief working officer of economic software program firm TS Think about, as a result of “we have now this mindset: doing extra with the identical.”

Slightly than hiring extra data employees for repetitive duties akin to filtering emails, Bodenski mentioned, implementing a brand new AI-based sorting course of has allowed TS Think about to carry headcount at current ranges…

TS Think about receives 100,000 e mail alerts every year, Bodenski mentioned, and manually sorting them requires 4,000 hours of labor—roughly equal to 2½ full-time employees.

AI can do the work at 3% of the price of the staff, he mentioned.

As you’d think about, when AI allows company managers to attain the identical output at simply 3% of the human workforce value, individuals lose jobs and corporations get wealthy.

Right here’s Galloway:

Current monetary information options two tales: layoffs and file income. These are associated.

As one illustration, take a look at Amazon

Right here’s Domusweb (a digital newspaper) to determine context:

Amazon.com Inc. is the second largest employer on the earth, with 1.5 million workers.

In comparison with its 2021 peak, nonetheless, it has seen a discount of greater than 100,000 workers in parallel with the enlargement of its robotic fleet, which grew from 200,000 machines in 2019 to 520,000 in 2022, and now stands at 750,000.

Tying in “file income,” let’s bounce to Fortune from final month:

After posting a record-breaking $20 billion in income throughout the fourth quarter of 2024 alone, virtually double its $10.6 billion from the identical quarter the prior yr, Amazon is as soon as once more trying just like the model of itself that lots of its rivals ought to worry…

[Amazon CEO Andy Jassy] instructed analysts on an earnings name Thursday that Amazon will spend round $100 billion or extra on capital bills in 2025, up no less than 20% from 2024.

The “overwhelming majority” of this yr’s capex will go towards supporting Amazon’s broad and deep investments into synthetic intelligence infrastructure because the tech big competes for what Jassy referred to as “most likely the most important know-how shift and alternative for the reason that web.”

Earlier this week, legendary investor Louis Navellier weighed in on this shift, talking instantly about Amazon

For newer Digest readers, Louis is among the most revered analysts in our trade. His potential to see what’s coming – and get his subscribers there forward of time – has helped him amass one of the crucial envied publication performance-records in our enterprise.

Right here’s Louis:

Amazon is constructing out totally autonomous warehouses… it’s working to automate the supply course of with self-driving vans and supply drones… and 30% of its “workforce” are already robots.

So, let me ask you this: How for much longer till Amazon decides these robots are able to tackle the total workload of its 1.5 million remaining employees?

And what do you assume will occur when 1.5 million hardworking People are out of the blue out of a job?

I don’t prefer it when individuals lose their jobs, of us. However the actuality is that that is taking place whether or not we prefer it or not.

On this new world, there will likely be two sorts of firms:

1. Those who grasp AI and make use of fewer and fewer individuals whereas producing enormous quantities of income.
2. Those who exit of enterprise.

And let’s be clear, this isn’t restricted to struggling firms utilizing AI as a lifeline to proper the ship and return to profitability.

Many of the firms incorporating AI as we speak are worthwhile. However AI may help them turn out to be much more worthwhile.

Right here’s Forbes making this level in an article highlighting company job cuts:

Michael Ryan, a monetary advisor, says that AI is a giant driver within the [job cut] bulletins…

“It’s not like these firms are struggling to remain afloat. They’re making these cuts whereas their backside traces look good.

“I believe what we’re seeing isn’t only a regular financial hiccup. It feels extra like firms are utilizing this second to essentially reshape how they function.

“They’re pondering, ‘Properly, if we will change these positions with automation, why wouldn’t we?’”

AI goes to widen as we speak’s wealth hole

Yesterday, I highlighted the “Technochasm.” That is the time period our world macro professional Eric Fry coined to explain the stark – and increasing – wealth hole in the USA that, largely, has been pushed by know-how.

Louis has come to the identical conclusion:

As an increasing number of firms make these adjustments, a chasm is opening up.

On one aspect are the businesses leveraging AI to unlock effectivity and enhance profitability. This may enable some firms to cement their market management, whereas others will use it to supplant the present king of the hill.

On the opposite aspect of the divide will likely be people who fail to adapt. They may stagnate – and even collapse – underneath the load of elevated competitors.

The fact is there’s a shift ripping by the economic system, and this cut up goes to create an enormous chasm between the haves and have-nots.

Tomorrow morning at 10 a.m. Jap, Louis, Eric, and our know-how professional Luke Lango are holding an important roundtable discussion focused on this chasm.

They’ll talk about be sure you’re an funding “have” as AI continues to widen the hole between the “haves” and “have nots.”

Collectively, they’ve recognized a small group of firms that seem finest positioned to leverage AI to extend their backside traces (and by extension, inventory costs) – no matter whether or not company managers admit that’s what’s taking place or preserve their “company Ozempic” hush hush.

Right here’s extra from Louis on tomorrow’s occasion:

Throughout this broadcast, we’ll:

• Present you three crucial steps it’s essential to take now to remain on the precise aspect of the Technochasm,
• Share the place the massive cash will likely be made in AI transferring ahead,
• Clarify how the Trump administration simply kicked off a modern-day Manhattan challenge… and why it may result in US dominance,
• Element why the AI Revolution has but to ship its greatest inventory market winners,
• And a lot extra…

Basically, we provides you with the blueprint you’ll want to observe if you wish to take advantage of cash potential on this subsequent chapter of the Technochasm.

To reserve your seat, click here (the click will immediately register/sign you up).

Wrapping up…

Let’s convey as we speak’s Digest full circle to these company buzzwords which might be camouflaging what’s taking place within the labor pressure. 

For those who’re an everyday market-watcher, you understand that Palantir has been one of many best-performing shares during the last two years. Whereas the S&P has climbed 39% over this era, Palantir has exploded greater than 1,000%.