AI is quickly becoming the go-to explanation for layoffs across corporate America. From ServiceNow, Inc(NYSE:NOW) to Block, Inc (NYSE:XYZ), and even voices like Larry Fink, the narrative is building: artificial intelligence is coming for jobs. Fink has even warned AI could drive unemployment higher, particularly among younger, white-collar workers.

It's a clean story. It's also a convenient one.

Because when you look at the data, the reality is far less clear.

• ServiceNow stock is trading at depressed levels. Where is NOW stock headed?

The Data Isn't Screaming ‘AI Disruption'

If AI were already displacing workers at scale, you'd expect to see it first in higher-skilled roles — the very segment most exposed to automation.

That's not happening.

Recent data shows unemployment among college graduates remains meaningfully below non-degree workers, with the gap still intact and only gradually narrowing — not collapsing in a way that signals a sudden AI shock. Separate research and analyst commentary have also pointed out that AI has not yet materially contributed to job losses at a macro level.

In other words, the labor market still looks cyclical — not structurally disrupted.

Blaming AI, Fixing Balance Sheets

That raises the bigger question: why is AI getting so much credit?

Part of the answer lies in incentives.

Framing layoffs as "AI-driven" signals efficiency to investors while avoiding political scrutiny tied to cutting domestic jobs. It also aligns companies with a forward-looking narrative rather than a backward-looking one.

Take Block, for example. The company has cut a significant portion of its workforce, reported in some cases as high as roughly 40%–50%. While automation and efficiency have been cited, analysts and industry voices have pointed to COVID-19 pandemic-era overhiring as a key driver of layoffs. Even executives like Salesforce, Inc’s (NYSE:CRM) Marc Benioff arguing companies expanded too rapidly and are now correcting.

Reports on Block's job cuts similarly describe them as a reset after COVID-era hiring, rather than purely AI-driven.

AI may be part of the story. But it may not be the main story.

Profitability Is Improving — But Why?

There's no question AI is helping margins — at least at the edges. Automation tools, copilots and workflow improvements are real.

But the timeline matters.

Most companies are still early in deploying AI at scale, with research from McKinsey showing that the majority remain in pilot or experimentation phases and have yet to achieve enterprise-wide impact. That makes it unlikely that AI alone is responsible for the current wave of job cuts.

Instead, what we may be seeing is a mix of:

  • Post-pandemic overhiring unwind
  • Cost discipline returning
  • AI providing a convenient narrative overlay

Narrative Vs. Reality

None of this means AI won't reshape the workforce. It likely will. But right now, the market may be pulling forward that impact.

For investors, that distinction is critical. If layoffs are truly AI-driven, the disruption is structural — and just beginning. If they're driven by overhiring and margin resets, the cycle may already be further along.

At the moment, executives are telling one story. The data, at least for now, is telling another.

Photo: Chayanuphol per Shutterstock