Wedbush Securities analyst Dan Ives has a message for tech CEOs racing to publicly tie artificial intelligence to headcount reductions. On a recent segment of The AI Daily Brief, Ives argued that framing AI as a workforce-reduction tool is a strategic mistake at a moment when investors are paying a premium for AI-driven growth stories over cost-cutting stories.
The Strategic Error
Ives was blunt about it. “My biggest concern is tech companies tripping over their own shoelaces, talking about job cuts, not reading the room, saying that their technology is going to wipe out jobs for young people. You do that, you just shot yourself in the foot.”
His reasoning runs through his view of where the AI industry is heading. Large language models, in his view, are on their way to becoming commodities. When that happens, the competitive edge shifts. “What’s going to separate companies? LLMs are going to get commodified. What separates companies is the people. It’s the engineering, it’s the marketing,” Ives said.
For investors, that translates to a simple read: CEOs telegraphing defensive cost cuts may be signaling the wrong posture at a moment when the market wants offensive growth. The host of the segment reinforced the point, calling AI agents “not a get out of budget jail free card but one of the best investment opportunities that companies have ever had.”
The Atlassian Case Study
Ives pointed to Atlassian (NASDAQ:TEAM | TEAM Price Prediction) as the clearest recent example of how these two narratives play out differently in real time. The maker of Jira and Confluence announced 10% layoffs in March, and the stock hit a year-to-date low in mid-April, falling from above $162 at the start of the year to around $74 as the layoff story dominated headlines.
Then Q1 2026 results landed. Atlassian reported revenue of $1.79 billion, up 31.71% year over year, and non-GAAP EPS of $1.75 against a $1.34 consensus. The release also disclosed a $223.83 million restructuring charge tied to workforce rebalancing and lease consolidation.
Atlassian “soared 29% that evening,” with the stock closing at $88.88 against a prior close of $68.59. Reddit sentiment confirmed the swing, flipping from bearish readings of 22 to 25 in early April to bullish scores of 65 to 72 in early May.
CEO Mike Cannon-Brookes leaned into the growth framing. Rovo AI usage, Service Collection crossing $1 billion in ARR, and remaining performance obligations of $4.0 billion gave investors a growth story to hold onto.
The lesson Ives drew from it is that layoffs alone tanked Atlassian’s stock. Layoffs, paired with genuine AI-driven product growth, rewrote the entire narrative in a single earnings cycle.
The Longer View
For investors thinking past this quarter, the segment closed with a Gartner projection that even if short-term AI-related layoffs begin around 2028, AI will ultimately create more jobs than it eliminates. That framing positions the current debate as a near-term CEO communications problem, not a long-run jobs crisis.
The signal worth watching is which management teams are being rewarded for what. Companies framing AI as a growth engine, with Atlassian as the most recent live example, have seen sentiment flip faster than the layoffs themselves could drag it down. Companies leading with cost cuts and headcount reductions, in Ives’ view, are still misreading the room.
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