Goldman Sachs warns AI will speed job cuts in 2026

Monday 05 January 2026 - 18:20

By: Dakir Madiha

Goldman Sachs warns AI will speed job cuts in 2026

Companies gear up to ramp up layoffs through 2026 as artificial intelligence shifts from experimental trials to large-scale operational automation, according to a fresh Goldman Sachs analysis released this week. Even with stable economic outlooks, the investment bank cautions firms increasingly trim headcounts to safeguard profit margins and fund hefty AI infrastructure spending instead of hiring.

The alert lands as the tech sector alone axed over 122,000 jobs in 2025, with AI explicitly blamed for nearly 55,000 U.S. cuts that year. Goldman Sachs chief economist Ronnie Walker found companies mentioning AI in workforce contexts slashed job postings more aggressively than peers, based on third-quarter earnings calls from nearly all S&P 500 firms.

Investors now view layoff announcements warily, unlike prior years. Goldman Sachs analysts noted stocks dropped an average 2 percent after recent cuts, even when firms blamed benign factors like automation and tech advances. Those citing "restructuring" faced harsher punishment. "Despite benign justifications offered, the equity market viewed recent layoff announcements as a negative signal on these companies' outlooks," the analysts wrote. Firms announcing cuts showed higher capex, debt, interest expenses, and weaker earnings growth versus sector peers.

Goldman Sachs expects layoffs to keep climbing, driven by earnings commentary and firms' stated push to deploy AI for labor cost savings.

Beyond tech where Amazon, Microsoft, and Intel led 2025 cuts 2026 forecasts point to deeper inroads into traditional sectors. Goldman Sachs launched its "OneGS 3.0" initiative in October 2025, featuring hiring freezes and job reductions in operational areas like client onboarding and regulatory reporting.

Financial services face acute risks. Morgan Stanley projects up to 200,000 European banking jobs could vanish by 2030 as AI algorithms handle back-office and compliance tasks. Wells Fargo CEO Charlie Scharf flagged more cuts and higher severance costs, calling AI "extremely real" in its workforce impact potential.

Walker's analysis shows most components of Goldman Sachs' layoff tracker "have risen notably" lately, with firms viewing AI not just as an efficiency tool but central to future human capital strategy. Roles tied to repetitive, routine, or process-driven tasks such as administrative positions, customer support, and professional services segments rank most vulnerable.