The promise of AI has become every C-suite’s favourite cost-cutting scapegoat.
Driving the news: A new report found that companies cited AI as the reason for over 50,000 layoffs in 2025, despite little evidence that roles were actually being replaced by the technology. Experts say it’s part of a growing trend of ‘AI-washing’: pointing to the promise of eventual AI implementation to justify layoffs.
Despite tens of thousands of purportedly AI-related job cuts at Amazon, Pinterest and other tech companies, researchers suggest very few of those roles have been filled by AI.
Why it’s happening: There aren’t many things investors love hearing in an earnings call more than “leveraging AI.” For companies that have simply overhired or are in precarious financial situations, citing AI is an easy way to justify layoffs in a way that markets also celebrate.
For example, Amazon, which doubled its workforce between 2019 and 2020 to 1.3 million people, has connected its adoption of AI agents to its string of recent layoffs.
Why it matters: AI-washing goes beyond justifying job cuts. More companies are exaggerating their AI capabilities, whether it's to appease shareholders, drum up consumer excitement, or attract investment.
Startups that just mention ‘AI’ can attract up to 50% more investment on average than those that don’t, one study found.
Our take: It’s not that companies are lying about using AI — many are just overstating how useful it is right now. A McKinsey report found that while almost every company invests in AI to some degree, only 1% have actually been able to “drive substantial business outcomes” with it.—LA