The tech sector has a new favorite excuse, and AI washing is rapidly becoming the defining corporate scandal of 2026. As earnings reports roll in and workforce numbers dwindle, a disturbing pattern has emerged: companies are slashing jobs and blaming “artificial intelligence” to boost their stock prices, even when the technology has nothing to do with the cuts.
The Guardian’s latest expose highlights how AI washing has evolved from a marketing gimmick into a labor crisis. In the past, the term referred to startups pretending to have advanced algorithms to secure venture capital. Today, it is being weaponized by Fortune 500 CEOs to rebrand painful austerity measures as “innovation,” providing a futuristic cover for old-fashioned greed.
The “Innovation” Smokescreen
To understand the severity of the issue, we first have to ask: what is AI washing in the context of employment?
Simply put, it is the practice of attributing firings to an “AI pivot” to make a company look cutting-edge rather than struggling. When a CEO announces that 10,000 workers are being let go to “focus on automation,” Wall Street cheers. The stock price goes up because investors believe the company is becoming more efficient and high-tech. However, the reality often involves simple cost-cutting, outsourcing, or the elimination of departments that have little to do with automation.
AI washing allows executives to evade responsibility. Instead of admitting to poor strategic planning or over-hiring during the pandemic, they can point to an inevitable technological tidal wave. It frames the layoffs not as a failure of leadership, but as a necessary evolution, effectively gaslighting the workforce into accepting their redundancy as “progress.”
The Giants Are Doing It
This AI washing isn’t happening in the shadows; it is happening in the headquarters of the world’s most powerful firms. i
Recent headlines involving Amazon UPS layoffs serve as a prime example of this narrative in action. Both logistics and tech giants have announced significant reductions in headcount, citing the integration of AI and robotics as a primary driver. While it is true that these companies are investing heavily in automation, analysts point out that many of the roles being eliminated are not being immediately replaced by software.
By linking these corporate restructuring efforts to AI, these companies protect their valuations. If they admitted they were shrinking because consumer demand was softening, their share prices would tank. But by blaming AI, they paint a picture of a lean, mean, future-proof machine, turning a negative financial indicator into a positive growth story.
The Investor Trap
The danger of AI washing extends beyond the employees losing their livelihoods; it is creating a massive bubble in the market.
Investors are pouring billions into companies that claim to be revolutionizing their operations with machine learning. However, if those claims are exaggerated the returns will never materialize. The corporate restructuring narratives are writing checks that the technology cannot yet cash. When the dust settles, the market may realize that it rewarded companies for firing people, not for innovating, leading to a potential correction that could wipe out trillions in value.
Reality vs. Hype
For the average employee or investor, knowing how to spot AI washing is becoming a critical survival skill.
Experts suggest looking at the R&D budget. Is the company actually spending money on developing new AI tools, or are they just buying a generic ChatGPT enterprise license? Another red flag is the specificity of the claims. If a company announces vague “AI-driven efficiencies” without detailing exactly which workflows are being automated, it is likely a smokescreen. True automation leaves a paper trail of new patents, software releases, and infrastructure upgrades.
The Human Cost
Ultimately, the tragedy of AI washing is that it trivializes the human impact of unemployment.When a layoff is framed as a technological upgrade, the displaced worker becomes a glitch in the system rather than a person with a mortgage. It sanitizes the violence of corporate restructuring. As we move deeper into 2026, the term AI washing will likely appear in more headlines, not just as a critique of bad marketing, but as an indictment of a corporate culture that values the appearance of intelligence over the reality of its workforce.
