For years, the big thinkers of Silicon Valley said many industries would be permanently altered by artificial intelligence. Radiologists would be out of jobs. Lawyers would stop writing briefs and contracts. And Wall Street wouldn’t need as many bankers.
It is unclear if those predictions of white-collar doom will come to pass. Unemployment for young people entering the work force has jumped, but the overall employment picture has not changed very much. Radiologists are still working. Lawyers are still writing contracts, or so they claim. Wall Street bonuses are hitting record highs.
But nearly four years after OpenAI lit the A.I. boom with its ChatGPT chatbot, the one industry that is unquestionably being disrupted by this once-in-a-generation technology shift is the tech industry itself.
Tech workers, it is becoming clear, have been building their A.I. replacements. The profitable business models of software companies are also threatened by A.I. Even the way companies are built is being turned inside out, as tiny shops use A.I. to build apps and software that would have taken dozens of skilled programmers just a few years ago.
“Silicon Valley is this really interesting petri dish right now of all of this change and transformation,” said Aaron Levie, the chief executive of Box, a company that makes software for storing and managing data.
Generative A.I. made by companies like OpenAI, Anthropic and Google can do many things. The one task it has become particularly good at is computer programming. That has given many tech companies the chance to start cleaning house, even if executives stop short of saying that’s what they’re doing.
“If you think A.I. is this amazing productivity pill, just take the pill and don’t lay anyone off and just double your revenue,” said Ted Egan, chief economist for the City and County of San Francisco. “But that’s definitely not what they’re doing.”
So far this year, more than 70 tech companies have eliminated at least 40,000 jobs, according to Layoffs.fyi, which tracks job cuts in the industry. Block, the financial services company that owns Square, Cash App and Tidal, laid off 40 percent of its work force in February, or about 4,000 employees.
“We’re already seeing that the intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company,” Jack Dorsey, Block’s top executive, wrote in a social media post.
Other companies have said they are laying off workers to finance their efforts in A.I., as the cost of developing and running the technology continues to climb. In March, Atlassian, which makes workplace collaboration software, cut 10 percent of its staff, or about 1,600 employees, “to self-fund further investment in A.I.”
“Our approach is not ‘A.I. replaces people,’” Mike Cannon-Brookes, Atlassian’s chief executive, wrote in a blog post. “But it would be disingenuous to pretend A.I. doesn’t change the mix of skills we need or the number of roles required in certain areas. It does.”
The leaders of the biggest tech companies have also said A.I. will reshape their work forces. In June, Amazon’s chief executive, Andy Jassy, said the company would operate with fewer corporate workers over time. In January, Mark Zuckerberg, Meta’s chief executive, said, “We’re starting to see projects that used to require big teams now be accomplished by a single very talented person.” That has left plenty of their employees worried about job cuts.
The layoffs have contributed to tech hubs like San Francisco — the home of OpenAI and Anthropic — not seeing the job growth characteristic of prior booms, Mr. Egan said. From 2022 through 2025, when the most recent data was available, San Francisco County lost about 30,000 tech jobs, according to data from the Census Bureau. It added roughly that number of jobs during the dot-com era and a start-up funding frenzy between 2020 and 2022.
That decline is visible across the country, too. Nationwide, tech jobs declined by about 150,000 from 2022 through 2025.
“The tech labor pool and talent pool is definitely reassembling,” Mr. Egan said. “A.I. is a big reason for that.”
But Mr. Levie said A.I.’s impact on tech may not be the model for what happens to other industries. A software developer will know quickly whether A.I.-generated code works, while the effectiveness of A.I. creations in other businesses, like the legal profession, can be much more subjective.
Part of tech’s reassembly is happening at start-ups. Gone is the traditional process of raising a boatload of venture capital funding, not worrying about revenue or profit and hiring heavily. Today’s start-ups are tapping A.I. tools like agents — personal assistants that can take actions on their own — to make money and grow with fewer employees.
Now, “a software company can launch multiple agents, and each one can do the work of 10 to 20 employees,” said Priya Saiprasad, an investor at Touring Capital.
On its way out, too, is the business model that has become the bedrock of a sector called “software as a service,” where customers subscribe to use software applications on the internet, rather than buy and install those apps on their own computers.
Over the past three decades, software providers have charged businesses based on the number of employees who used their software — and enjoyed regular revenue growth as those firms grew. That business model, known as “seat-based” or “per-seat” pricing, has been the centerpiece of tech giants like Salesforce, which makes sales and marketing software, and ServiceNow, which automates corporate processes.
But seat-based pricing is threatened by A.I. The business model is “all predicated on the fact that, if a company does well, it needs a lot more employees,” Ms. Saiprasad said. “The irony is that, in this A.I. world, that does not equal success” because fast-growing companies might expand by adding so-called A.I. agents instead of hiring people.
Some software providers are predicting that A.I. will automate certain jobs, so their customers will have fewer employees to use their software. Others are adding A.I. features that require more computing resources and are more expensive for them to offer. And they all are facing competition from “open source,” or free-to-use, A.I. tools that could replace their products altogether.
“Right now, with A.I., it’s the wild, wild West,” said Alex Zukin, a software analyst at Wolfe Research. Software providers and their customers are “in a state of massive, simultaneous experimentation.”
One business model being tested, called “usage-based” or “consumption-based” pricing, charges customers based on how much they use the software. Another model, known as “outcome-based” pricing, charges customers only when the software completes a task.
But no model has emerged as the clear winner. That’s in part because of an unanswered question: “How do you define an outcome?” said Akash Bhatia, who leads the technology sector at Boston Consulting Group. “That’s very tricky.”
Software providers are also considering new revenue streams. As A.I. agents proliferate, companies like HubSpot and Workday have discussed charging agents for access to their software.
“We’re not a free data pipeline for everybody to take that information out,” said Yamini Rangan, the chief executive of HubSpot, which makes sales and marketing software, during a call with analysts in February.
The new business models have made it more difficult for investors to evaluate the businesses of software companies, Ms. Saiprasad said. Unlike revenue from seat-based pricing, the money that other models bring in is less predictable, she added.
The shift has spooked Wall Street. Since October, anxieties over A.I. have erased roughly $3 trillion in market capitalization from software companies, or a third of the value of the S&P 500 index’s software sector. So far this year, shares of Salesforce and ServiceNow have fallen about 30 percent.
“This is an industry that people believed is extremely durable and that, once you get a customer, you have that relationship for the next one, three, five, 10 years,” Mr. Zukin said. “Now, with the changes happening, you don’t even know what’s going to happen in two months.”
Erin Griffith contributed reporting from San Francisco, and Joe Rennison from New York.
Kalley Huang is a Times reporter in San Francisco, covering Apple and the technology industry.
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