| When Microsoft cut roughly 6,000 jobs this past week, it exposed a telling contradiction: While heading into a major boom in the software market, one of the world’s biggest tech companies is laying off people in product management and software engineering. The cuts highlight the risk that AI poses to coding jobs, as Bloomberg News reported. Microsoft hasn’t announced a hiring freeze, but it finds itself navigating the same strange moment as the rest of the corporate world: a technology boom in the form of AI, with a backdrop of massive economic and policy uncertainty. “Microsoft’s layoffs in software engineering and AI roles are a bellwether for how generative AI is beginning to reshape work,” said Molly Kinder, a researcher at the Brookings Institution who studies AI and labor. “Coding is at the leading edge of AI integration, so it’s no surprise that engineers are among the first to feel the impact. They’re the first — but won’t be the last.” It’s not just Microsoft: Norway’s sovereign wealth fund said this week that it did not expect to add to its headcount, due to AI — echoing a sentiment shared by tech CEOs at companies including Shopify and DuoLingo. For many companies, AI-driven productivity improvements seem more appealing right now than hiring. Alphabet and Microsoft have both said that AI now writes or assists 30% or more of their code. “I might argue we’ve seen peak employment in the Magnificent 7,” Jeffrey Bussgang, a venture capitalist at Flybridge Capital Partners, told me in April. “We may see that all of these companies never grow headcount again. That they just grow 20-30% a year of revenue with flat headcount.” It’s clear from mentions of generative AI in recent earnings calls that a lot of companies are already using the technology to make their operations more efficient, especially for coding, research, customer service and marketing. A few examples: -
Intuit in February: “We're also seeing improved coding productivity with up to 40% faster coding using GenAI code assistance.” -
Expedia in May: “Our marketing team is using generative creative AI both to make their marketing more effective, and also to save time.” -
Coca-Cola in February: “This year, for the first time, our Coca-Cola Christmas ad was created with generative AI, combining emerging technology with human creativity, which allowed us to produce the ad faster and at a lower cost.” -
Palantir in May: “We're not talking about co-pilots that make you 50% more productive, we're talking about agents that make you 50 times more productive.” Global uncertainty around tariffs and the macroeconomy could further speed this kind of AI adoption. Uncertainty tends to weaken hiring and some research suggests that downturns prompt firms to invest more in IT — both because they have more spare capacity and because they want to make their operations more efficient. Companies that might otherwise be expanding and hiring may opt to keep their options open, and pursue the relatively cheap, flexible path of pushing AI efficiency. “Talking to tech firms I have repeatedly heard discussions about reducing hiring or absolute headcount because of AI,” says Nicholas Bloom, an economist at Stanford. “Absolutely the macro situation will make this worse. Business sentiment has taken a dive with the tariff chaos and broader DOGE churn. So firms are slowing on hiring.” It’s too soon to know whether automation is proceeding faster because of macro uncertainty, and what that would mean for jobs like coding. But if AI proves capable of automating work cheaply and is spurred on by companies’ reluctance to hire in the face of uncertainty, it could amount to a sort of perfect storm for some segments of the labor market. “Winter is not coming yet,” says Bloom. “But this is a worrying few whiffs of snow.” — Walter Frick, Bloomberg Weekend | 
