AI job cuts driven by decade of over-hiring

Mike Taylor

Managing Editor and Publisher

23 March 2026

Recent job cuts across major companies attributed to the adoption of artificial intelligence (AI) may be as much theatre as genuine threat, according to research and ratings house, Morningstar.

Morningstar market strategist, Lochlan Halloway has pointed to the major companies in the news for announcing significant job losses and noted that all of them had been guilty of previously rapidly building their headcount.

“…before reading these job cuts as the starting gun of the great AI replacement, some context. In the last ten years, Atlassian has grown its headcount roughly sevenfold. Block’s headcount has grown almost sixfold, and WiseTech’s elevenfold, including the recent acquisition of e2open,” he noted in Morningstar’s newsletter.

“The layoffs are being made from a high starting point, after a decade of hiring that, in hindsight, might’ve outpaced what these businesses actually needed,” Halloway said.

“There is also an incentive worth keeping in mind. If I was a software CEO, with investors demanding to know why my business was not going to be disrupted by AI, attributing a redundancy round to AI efficiency is one helpful way to reframe the conversation,” he said. “It turns a defensive posture into an offensive one. And as Charlie Munger put it, show me the incentive, and I will show you the outcome.”

Halloway said that he might be wrong about the emergence of a great AI replacement but “the evidence in front of us points more convincingly to companies correcting over hiring, under pressure from shareholders who have been asking hard questions about cost structures”.

“For now, I think the simpler explanation deserves more credit than it is getting,” Halloway said.