‘The cost of compute is far beyond the costs of the employee’: Nvidia executive says right now AI is more expensive than paying human workers

Recent tech layoffs would initially appear to indicate the great labor shift from human workers to AI may already be happening. Meta announced in a memo earlier this year it plans to lay off 10% of its workforce, about 8,000 employees, as well as scrap plans to hire for 6,000 open positions. It’s part of an effort to “run the company more efficiently and to allow us to offset the other investments we’re making,” according to the memo. Microsoft has offered thousands of its own employees a voluntary buyout, the largest the company has ever offered. Other tech headers, however, suggest that right now, AI isn’t saving companies money on labor; it’s actually costing them more than the humans they currently employ. “For my team, the cost of compute is far beyond the costs of the employees,” Bryan Catanzaro, vice president of applied deep learning at Nvidia, told Axios in April. An MIT study from 2024 backs up these executives’ experiences. Analyzing the technical requirements of AI models needed to perform jobs at a human level, researchers found that AI automation would be economically viable in only 23% of roles where vision is a primary part of the work. In the remaining 77% of the time, it was cheaper for humans to continue their work. In other instances, AI has proved to be fallible, with one engineer saying an AI agent destroyed his database and network as a result of what he called “overuse.” Why are tech firms pouring money into AI despite financial pressures? Despite no clear evidence of AI improving productivity and, according to the Yale Budget Lab, no widespread data to support the idea of AI displacing jobs, Big Tech firms have continued to pour money into AI, announcing $740 billion in capital expenditures this year so far, according to Morgan Stanley, a 69% increase from 2025. The magnitude of spending has caused some companies to rethink their budget altogether. “I’m back to the drawing board because the budget I thought I would need is blown away a