A deep divide is emerging in corporate boardrooms over artificial intelligence, forcing executives to choose one of two paths: use AI to cut staff, or use it to augment them. For every company like Coinbase Global Inc., which is cutting 14% of its workforce citing AI, there is another like Axon Enterprise Inc., which has assured its 5,000-plus employees that AI is a tool to do more, not a reason for replacement.
"Block out the noise and keep kicking ass," Axon President Josh Isner wrote in a recent email to staff, encapsulating the philosophy of the augmentation camp. This view is shared by Spotify Technology co-CEO Gustav Söderström, who said the company is "keeping our head count roughly flat and just doing much more shipping, more value to consumers." This strategy bets on long-term growth and innovation by stretching the capabilities of the current workforce.
In the other camp, the cost-cutting motive is immediate. PayPal Holdings Inc. plans to cut 20% of its staff over the next few years as it increases AI adoption. Meta Platforms Inc. is laying off 8,000 people, about 10% of its workforce, with its CFO questioning the company's optimal future size. According to a Gartner survey, about 80% of companies using AI agents are cutting staff, a move often rewarded by the market with a short-term stock bump, as seen with Block and Snap Inc. following their own AI-related job cuts.
This strategic choice is creating significant "fear of becoming obsolete," or FOBO, among employees. While leaders believe 76% of employees are enthusiastic about AI, only 31% actually are, creating a chasm of misunderstanding. This anxiety manifests as knowledge hoarding and quiet disengagement, which undermines the very innovation AI promises. "Scared people don't innovate; they protect themselves," said Ryan Farsai, a Vice President at Illumio Inc., in a recent column. "You have to address the fear first if you want real buy-in."
Some firms are actively trying to address that fear by modeling a third way. NAEGELI Deposition & Trial, a national court reporting firm, partnered with legal AI specialist Verbit not to replace its staff, but to give them better tools. "Our people are the most important part of the company, and I protect the employees and their positions with a fervor," said NAEGELI's CEO Marsha Naegeli. The partnership has allowed the firm to increase accuracy and take on more cases, demonstrating a model where technology strengthens, rather than displaces, skilled professionals.
For investors, the divergence presents a new analytical challenge. The immediate bottom-line benefit of layoffs is easy to measure. However, the companies choosing to augment their workforce may be building a more resilient, skilled, and innovative team for the long run. The risk for companies pursuing aggressive cuts is that the resulting employee anxiety and demoralization could stall productivity and innovation, offsetting the initial cost savings. As one laid-off Coinbase employee noted, AI may ultimately create "more work, not less," a sentiment echoed by leaders who find the technology is still additive to workloads without yet delivering on its promised efficiencies.
This article is for informational purposes only and does not constitute investment advice.
