AI is Currently More Costly than Human Workers, Nvidia Executive Admits

A wave of job cuts across the tech sector might seem like evidence that AI is already replacing large numbers of workers. Yet a closer look suggests the economics behind AI adoption remain far more complicated. 

Earlier this year, Meta revealed plans to reduce its workforce by 10%, affecting around 8,000 employees, while also abandoning recruitment efforts for about 6,000 vacant roles. The company said the move was intended to improve efficiency and help fund other strategic investments. 

Microsoft has taken a similar approach, offering a voluntary separation package to thousands of staff members in what is reportedly the largest program of its kind in the company’s history. 

At the same time, many executives say AI remains an expensive technology to deploy. Bryan Catanzaro, Nvidia’s VP of applied deep learning, said in April that computing expenses for his team greatly exceed personnel costs. 

Research published by MIT in 2024 supports that assessment. After examining the infrastructure required for AI systems to perform tasks at a human level, researchers concluded that automation made economic sense in only 23% of jobs heavily dependent on visual work. In most cases, human employees remained the cheaper option. 

There have also been concerns about reliability. One engineer recently claimed an AI agent damaged both a database and a network environment after excessive use. 

Despite limited evidence that AI is significantly boosting productivity or broadly replacing workers, technology companies continue to invest aggressively. Morgan Stanley estimates that major firms have announced roughly $740 billion in capital spending this year, marking a 69% jump from 2025 levels. 

The scale of those commitments is forcing some organizations to reconsider their financial plans. Praveen Neppalli Naga, Uber’s chief technology officer, recently said the company’s budget for AI coding tools had been exhausted only months into the year. The rapid adoption followed internal efforts encouraging employees to use products such as Claude Code. 

Microsoft has faced similar challenges. Reports indicate the company is reducing many direct Claude Code licenses and shifting employees toward GitHub Copilot CLI after demand for AI-assisted development tools surged faster than expected. 

Meanwhile, layoffs continue. Layoffs.fyi data shows that over 118,000 tech workers have lost their jobs across 100 companies in 2026, approaching last year’s total well before the year ends. 

Finance and AI professor Keith Lee believes the situation is a temporary imbalance. High hardware, energy, and infrastructure expenses continue to limit AI’s cost advantage. Software prices have also climbed significantly, while flat-rate subscriptions often fail to cover the costs generated by heavy users. 

Lee adds that businesses increasingly view AI as a tool that complements employees rather than replaces them. That could change if operating costs decline, infrastructure improves, and pricing models evolve. 

However, lower costs alone will not determine AI’s future. The technology must also become more dependable, require less oversight, and integrate smoothly into business operations. In Lee’s view, widespread replacement of human labor will occur only when AI proves both affordable and consistently reliable at scale. 

For companies like AI Maverick Intel Inc. (OTC: AIMV) that are leveraging AI to augment human input, the math is likely working out with no need to choose between the technology and human employees. 

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