'A good scapegoat': Wall Street assesses latest AI-linked job cuts

Wall Street is weighing the market implications of recent AI-linked layoffs, as companies increasingly cite AI-driven productivity gains as rationale for workforce reductions. High-profile cuts include Coinbase trimming 14% and Cloudflare cutting 20% (about 1,100 roles). Strategists warn it’s unclear how much job loss stems from genuine efficiency improvements versus cost-cutting or managerial trimming, creating mixed signals for earnings and sector valuations. Layoff announcements rose 38% in April, even as overall U.S. job growth stayed firm; Information-sector employment is down 342,000 (11%) versus its Nov 2022 peak. Investors are advised to differentiate firms that can sustainably boost margins through AI from those using it mainly to cut costs, making stock selection increasingly important for performance in the near term.