Automation over hiring: Goldman Sachs warns 2026 could see another wave of AI-led layoffs

Artificial intelligence is rapidly reshaping how companies operate, but the shift is also deepening concerns over job security. Experts warn that 2026 could bring another round of layoffs as businesses increasingly turn to AI to cut costs and streamline operations, even if the broader global economy remains relatively stable.  

A recent report by Goldman Sachs suggests that AI-driven layoffs are likely to continue into 2026, despite a noticeable shift in how financial markets view workforce reductions. While investors are no longer consistently rewarding companies for cutting employee costs, automation remains a central strategy for firms looking to protect margins and improve efficiency.  

The report, released just days before the New Year, offers some reassurance for workers by noting that markets have grown cautious about aggressive cost-cutting. However, its broader conclusion is clear: artificial intelligence continues to pose a serious threat to many jobs.  

Jobs cut ahead of AI gains  

Across industries, companies are pouring billions into AI tools designed to automate tasks, accelerate workflows, and reduce operating expenses. Rather than expanding headcount, many firms are using technology to replace roles that were once handled by human workers. This shift is driven less by growth ambitions and more by a desire to permanently lower employee-related costs.  

Ironically, economists note that the most significant productivity gains from AI may take years to materialise. Yet companies are acting pre-emptively, shrinking their workforce in anticipation of a more automated future. Roles involving repetitive, routine, or process-driven tasks are considered most vulnerable.  

Investor sentiment begins to change  

Until recently, layoffs were often welcomed by investors as a sign of disciplined management. That perception is now evolving. Markets are increasingly interpreting job cuts as a potential red flag, signalling weaker future growth rather than operational strength.  

Despite this shift, analysts believe companies will continue to pursue layoffs if they see automation as essential to long-term competitiveness. For many firms, maintaining lean teams supported by AI systems is viewed as a strategic necessity rather than a short-term response.  

Job losses beyond tech  

The past year has been especially challenging for workers. Large technology firms led the wave of layoffs, citing restructuring and a renewed focus on AI-led systems. However, job losses were not confined to Silicon Valley.

Consulting firms, IT service providers, and even traditional businesses have also trimmed staff as they prepared for digital transformation and tighter cost controls. The push toward automation has cut across sectors, affecting both white-collar and back-office roles.  

New roles, new skills  

Looking ahead to 2026, experts expect AI’s impact on employment to intensify. While certain jobs may disappear, new roles are likely to emerge in areas such as AI development, data governance, system monitoring, and ethical oversight. However, these positions will demand different — and often more advanced — skill sets.  

For employees, adapting to this shift will be critical. Continuous learning, upskilling, and technological literacy are becoming essential for job security. Analysts say companies that strike the right balance between AI adoption and human talent may ultimately perform better and build more sustainable businesses in the long run.