There’s been a pretty clear-cut pattern to all the big layoffs that we’ve seen over the past year. Companies announce a major cut, executives blame AI, and markets nod along like it all makes perfect sense.

Amazon (AMZN) did it last year, and Jack Dorsey followed suit in February. Corporate leaders have been warning us for years about job displacement as a direct result of AI efficiencies, and it looks like it's finally happening. That’s just something we’ve all got to accept, right?

Not according to OpenAI CEO Sam Altman. He reckons all of these mass job losses have less to do with AI and a whole lot more to do with old-school business realities that are hitting big-time companies harder than they care to admit.

This so-called Silicon Valley trend even has a name: “AI washing.” 

It’s certainly in the best interest of an AI boss to deflect negative attention away from the products his company is shipping. But if Altman is right, this new trend could be responsible for some major economic upheaval in the months to come. Investors need to start catching up fast, or they could end up getting burned later.

What is this AI Washing Trend All About?

Sam Altman makes a pretty compelling case. In October, Amazon announced plans to cut some 14,000 jobs just a couple of months after CEO Andy Jassy sent out an evangelical memo to employees declaring his love for generative AI and how it would transform Amazon moving forward.

“As we roll out more Generative AI and agents, it should change the way our work is done. We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs,” he wrote.  

“It’s hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company.”

Fast-forward a couple more months, and Block (XYZ) CEO Jack Dorsey was doing the exact same thing. In February, the company said it was letting go of almost half its workforce to save money and capitalize on AI efficiencies.

“A significantly smaller team, using the tools we're building, can do more and do it better. And intelligence tool capabilities are compounding faster every week,” Dorsey wrote in a letter to shareholders.

“I don't think we're early to this realization. I think most companies are late. Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes.”

At first glance, the logic there is pretty straightforward. AI is getting more powerful, and productivity is increasing. That means fewer workers are required to generate the same output—and while Sam Altman isn’t denying AI has shifted labor markets, he’s pushing back on these claims that AI means companies have no choice but to cut their headcounts in half.

According to Altman, layoffs like the ones we’ve seen at Block and Amazon are really about old-school fundamentals like overhiring during the pandemic and cost-cutting in a higher-rate environment. With revenue growth slowing in numerous industries and pressure from investors to improve margins, it’s starting to look like AI isn’t what’s driving layoffs.

It’s just a scapegoat that sounds more palatable in a press release.

Why AI Washing Makes Sense for Companies

Let’s be honest: If you’re the CEO of a large-cap company and you’re announcing layoffs, you don’t want to tell shareholders it’s because you overexpanded and now you need to cut costs. That reflects badly on your leadership, and it’s going to send your share prices plummeting. 

But if you tell everybody that you’re restructuring to align with the future of AI, it doesn’t sound like you’ve messed up, does it? It sounds like you’re making a bold, strategic choice. Blaming AI reframes layoffs as forward-looking and innovative. It’s an easy out.

Unfortunately, that narrative doesn’t hold up under scrutiny. If AI were genuinely replacing workers at scale in 2026, shareholders would be salivating over massive productivity gains generated by widespread AI adoption at every level of business.

But the simple truth is that AI isn’t efficient enough to eliminate entire departments overnight. Last month, the National Bureau of Economic Research published a huge survey of more than 6,000 senior executives. Almost 90% of business leaders in the U.S., the U.K., Germany, and Australia told researchers that AI had zero impact on employment over the last three years.

That’s not to say AI isn’t impacting countless companies in very real ways. 

Businesses are updating their skill requirements. Employees are now being asked to manage AI systems and integrate automation into their workflows, and top performers who can leverage AI effectively are becoming a lot more valuable.

That value is something investors need to price in moving forward—but it’s not a realistic excuse to make half of your workers redundant.

What Does This Trend Mean for Investors?

Unfortunately, AI washing isn’t just a threat to the job security of white-collar workers. It could really mess things up on Wall Street.

If layoffs like the ones happening over at Block and Amazon are being misattributed to AI, that means markets will be simultaneously overestimating the near-term AI disruption and underestimating traditional economic pressures. 

This matters big time, because it distorts how shareholders are looking at earnings reports, hiring trends, and productivity data. Meanwhile, it reframes the AI trade and makes an overly bullish case for companies like OpenAI. 

At the end of the day, investors have got to tread lightly here. AI is going to create massive change in labor markets and fundamentally shift the world of work some day. But we’re just not there yet, and pretending we are sets everybody back.

Right now, it looks like Sam Altman is right. So, if you want to understand what’s really happening in the economy, make sure you’re looking beyond the headlines. There are some companies out there pushing a futuristic narrative that just doesn’t track, and we’re probably going to see a whole lot more AI washing as 2026 progresses. 

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