I'm going to start calling these "Canary" moments.
Assuming we take everything at face value for these sorts of cuts, it creates the following scenario:
A company finds itself with surplus labor capacity due to the efficiencies in AI while also posting substantial profit or revenue growth. The company could downsize the workforce to capitalize on short-term efficiencies and increase margins, though this will come at the cost of long-term reputational harm due to posted profits/health as well as burning out staff who must do the same (or increasingly, more) work with less headcount, leading to attrition when the market shifts in their favor. Alternatively, it could leverage this surplus labor for a period of moonshot R&D or paying down technical/process debts while they have the capacity and the profit to pay for it, which harms short-term share price relative to their competitors slashing jobs, while improving the company's capabilities in the marketplace in the long-run, potentially through mastery of these AI tools or the creation of new product lines.
The fact so many orgs opt for immediate greed over long-term growth really is its own canary that leadership and governance both has failed the marshmallow test.
If using AI had a "substantial profit or revenue growth" wouldn't it make more sense to hire more people so they can use more AI and increase revenue?
That's the thing. There is no surplus labour capacity, neither they have any ideas for moonshot projects that could pay off left
cloudflare vibecoded a wordpress clone (emdash), they have no idea where to allocate engineers to make new products.
I think as someone pointed out earlier, this is more likely about margin preservation as their gross margins are deteriorating really quickly.