AI, Lemmings, and the Future of Work

Is the tech industry on a path to self-destruction?

The money in tech is moving in one direction. Up. Past you. Past the engineers building the products. Past the people who sweep the office at night. Up to Nvidia, up to the people who own Nvidia, up to a class of person who has never written a line of code in his life and never will.

Brian Catanzaro at Nvidia just told Axios the quiet part out loud. Compute costs more than the engineers do. Read that twice. The thing AI is supposed to replace, an engineer, is cheaper than the thing AI runs on. The pitch deck for the last three years was that AI would free us from the burden of paying humans. The pitch deck was wrong. The humans were the cheap part the whole time.

The layoffs are still happening anyway. That is the part that boggles the mind.

Meta and Microsoft Are Cutting Their Own Arms Off

Meta laid people off. Microsoft laid people off. Salesforce paused engineering hiring. IBM paused hiring for anything they thought a language model could do. Every quarterly earnings call is the same script: efficiency, productivity, AI enablement, headcount reduction. The CFO says it with a straight face and analysts nod along.

Run the actual math. You fire a senior engineer making $300k. You replace him with a Claude Code subscription. The Claude Code subscription, plus the GPU time it sits on, plus the data center it sits in, plus the cooling, plus the power, plus the depreciation on the H100s you bought last year, plus the H200s your competitor is forcing you to buy this year, plus the talent premium for the one or two people who can actually wire all of it up, costs more than the engineer.

This is the 127 Hours strategy. Aron Ralston pinned his arm under a boulder and cut it off with a dull pocket knife. The arm was him. The arm was alive. He cut it off because he thought it was the only way to survive. These companies are doing the same thing, except there is no boulder. They are sawing off their own arms in the parking lot because someone in a Patagonia vest told them the arms were the problem.

$740 Billion Lit on Fire

Morgan Stanley estimates the hyperscalers will spend $740 billion on AI data centers. That number is so large the only thing you can really do with it is round it. It is roughly the GDP of Switzerland. It is being spent on the bet that this all works out.

Yale's Budget Lab ran the numbers on whether AI is actually replacing jobs. The finding, in plain language: there is no statistical evidence that it is. The jobs are going away, sure. The data does not show those jobs going away because of AI. They are going away because executives have decided to act as if AI can replace them, which is a different thing entirely.

MIT did the same exercise from a different angle. They asked: of the roles AI could plausibly automate today, how many are actually cheaper to automate than to keep paying humans for? Most are not. The compute is too expensive. The humans were already a bargain.

So we have a $740 billion bet, against a labor force that was already underpriced, justified by efficiency gains the data does not support. And the way the bet is being financed is by firing the people who would have built the next product, on the theory that the bet itself will build the next product instead.

The Lemming Problem

Jensen Huang gave a talk where he suggested companies should spend half a developer's salary on AI tokens. Half. He said it as if it were obvious. He said it as if he were not the man who sells the GPUs the tokens run on. The CEO of Nvidia, in public, told every other CEO they should be moving 50% of their dev budget to his company's revenue line.

Of course they sign it. Of course they sign it.

This is what tech leadership looks like in 2026. There is no analysis. There is a man on stage in a leather jacket telling a room full of MBAs what to do, and they go back to their offices and do it. They do not run the math. They do not ask whether their company's specific situation matches the slide. They sign the contract because the other CEOs are signing the contract, and if they are wrong together, it will not be their fault.

This is herd behavior dressed up as strategy. When everyone is on the same trade and the trade goes bad, nobody gets fired, because nobody could have known. The signal up there is not what is true. The signal is what the other people in the room are doing. Everyone in the room is doing AI. So everyone in the room does AI.

Small Companies, Different Math

For a 10-person startup, AI tools genuinely help. You get one engineer doing the work of three. The compute bill is small. The leverage is real. I use these tools every day. They are good.

For a hyperscaler, the math inverts. The compute bill is enormous. The leverage is a marketing claim. The engineers were already cheap. The AI does not write the next product on its own; it makes a senior engineer some percentage faster at writing a feature that a different team might or might not ship. Twenty percent of one engineer's salary does not pay for the GPU time. The trade does not clear.

The CEOs at the top of these companies do not seem to know this. Or they know it and do not care, because their bonus is tied to whether the stock went up this quarter, and the stock goes up when they say "AI" eight times on the call.

Who Actually Wins

The class that always wins. The people who own the toll booths. The people who got into Nvidia at $50 and are now sitting on a multiple they will never spend. The people who do not work and have not worked in three generations and whose passive income pays them more in a year than the average tech engineer will earn in a lifetime.

The capital is moving. It is moving from the operating budget of every Fortune 500 company into a small number of asset accounts that already had nine figures in them. The mechanism for the transfer is the AI buildout. The justification for the mechanism is the layoffs. The layoffs are the cost passed to you and to the guy two desks over and to the recruiter who hired both of you and is now also let go.

Meanwhile, the claim that AI is making everyone more productive is being used as cover for further extraction. Same hours, fewer people, more output, no raise. The productivity gain is real. The gain is not reaching the worker who produced it.

The Question

Is AI actually reshaping industries for the better, or is this another bubble that will pop and leave a generation of laid-off workers wondering what just happened?

I keep going back to Catanzaro's number. The compute is more expensive than the engineer. The man whose paycheck depends on the answer being the opposite said this in public. If you take nothing else from this post, take that.

If this lands with you, send it to the engineer next to you who is wondering whether he should be worried about his job. He probably should be. Not because AI is better than him. Because the people who run his company have decided to act as if it is.