If everyone else is downsizing and using AI as an excuse, it's both a pretty good cover for any firing you might have wanted to do for a while, and you can reasonably assume you can hire back in the future because everyone else is firing too. Maybe you can even depress their wages a little?
Except you burn a tonne of cash on redundancy payouts
I think this is exactly what/how C-suite thinks. It's incredibly dumb because of how much hiring/firing costs in terms of ramp up/context/productivity etc, and inevitably, they will have fired people that are great and have kept people that suck but know how to play the game.