Michał "rysiek" Woźniak · 🇺🇦

Shot:

CloudFlare fires 20% staff claiming it's because of "AI"-related productivity gains
https://techcrunch.com/2026/05/08/cloudflare-says-ai-made-1100-jobs-obsolete-even-as-revenue-hit-a-record-high/

Chaser:

Since that announcement CloudFlare stock lost 22% of value.

Even investors seem to not be buying the "AI productivity gains" bullshit anymore.  

#AI #CloudFlare #Layoffs #Bubble

May 13 at 11:07pmWeb
Show threadMichał "rysiek" Woźniak · 🇺🇦May 13

More likely *actual* reasons for those layoffs in general in the tech industry – I am too lazy to look into CloudFlare specifically:

Section 174 tax shenanigans
https://qz.com/tech-layoffs-tax-code-trump-section-174-microsoft-meta-1851783502

Overhiring during COVID
https://edition.cnn.com/2023/01/22/tech/big-tech-pandemic-hiring-layoffs

Firing people to fund data center build-outs which banks no longer seem interested in lending money for
https://www.cio.com/article/4125103/oracle-may-slash-up-to-30000-jobs-to-fund-ai-data-center-expansion-as-us-banks-retreat.html

How a tax code time bomb fueled mass tech layoffs

A decades-old tax rule helped build America's tech economy. A quiet change under Trump helped dismantle it

Quartz
Show threadMichał "rysiek" Woźniak · 🇺🇦May 13

And yes, managers outright admit they are using the "AI productivity gains" lie to explain layoffs because it works better with stockholders than admitting the real causes behind them:
https://www.resume.org/the-great-turnover-9-in-10-companies-plan-to-hire-in-2026-yet-6-in-10-will-have-layoffs-2/

Funny how that did not seem to work that well for CloudFlare, huh. 

The Great Turnover: 9 in 10 Companies Plan To Hire in 2026, Yet 6 in 10 Will Have Layoffs - ResumeTemplates.com

Resumetemplates.com sought to understand how Gen Z ghosting affects recruitment efforts and how managers are responding.

Resume Templates
Show threadMistake not ...May 13
@rysiek I wouldn't say no productivity gains at all 20% seems reasonable as a first order approximation if you do a lot of boilerplate stuff... it's just you know it isn't thaaaat much when you factor in all the creative new ways your employees now find to fuck up faster than before. Certainly not enough in there to downsize your operation like this. So yea, speaking in my limited capacity of shareholding, I wouldn't touch that stock with the longest stick you care to produce.
Show threadMichał "rysiek" Woźniak · 🇺🇦May 13

@zeri I have seen study after study blowing the productivity gains stuff out of the water.

Regardless though, if you're CloudFlare and suddenly you can actually do 20% more with your staff, why fire them, why pay severance? Why not expand, finish that lingering internal systems rebuild project, create new services or improve the ones you already have?

Unless, of course, there is *something else* behind that need to save money. 👀

Show threadwaldiMay 14
@rysiek But why would you not use those 20% to invent new stuff?
Show threadMichał "rysiek" Woźniak · 🇺🇦May 14
@waldi right?
Show threadwaldiMay 14

@rysiek And now I have to think about scams. Because what is "claiming so much more productivity, so we must reduce it" not a scam?

There are devices out there that are advertised with 40% less full burn for your car. And the car manufacturers don't want you to know about. Sorry, but this would be the holy grail. Every car manufacturer would pay a small fortune for such an advantage over the competition. (In the end it's an empty box with some blinking LED.)

Show threadMichał "rysiek" Woźniak · 🇺🇦May 14
@waldi haha, good point!
Show threadTomasz OryńskiMay 14
@waldi @rysiek but you don't realise that such great inventions are hidden from you by Big Oil! :)
Show threadwouterlaMay 14

@rysiek It does seem like the rational response to 'AI firings'.

If I had a tool that would genuinely make my people more productive, but instead of using it to build more and better products, I use it for cutting costs, what signal does that send?

Either I'm completely without ambition, and unfit to lead a growing company, or my product and its market are no longer evolving and I'm converting to large scale, low margin modes of operation.

Neither is a very attractive target for investment.

Show threadMichał "rysiek" Woźniak · 🇺🇦May 14
@wouterla yes, I agree. But up until now-ish, this strategy paid of big time for the tech companies. They announced huge lay-offs, blamed "AI productivity" (always without proof), and then usually got a bump in stock price…
Show threadTane Piper ⁂May 14
@rysiek @wouterla what's terrify about the entire thing is I've heard the tales of our Cloudflare migration. Let's just say that thankfully it was a fixed cost project ...
Show threadAnisseMay 14
@rysiek @Signez I saw this go around, but it's mostly false: the graph is truncated, and they just lost the one week pre-results bump due to speculation.
Show threadMichał "rysiek" Woźniak · 🇺🇦May 14

@Aissen @Signez here's where I got the graph from:
https://finance.yahoo.com/quote/NET/

Compared to pre-results bump they still lost about 10%, check the 6mo chart.

Cloudflare, Inc. (NET) Stock Price, News, Quote & History - Yahoo Finance

Find the latest Cloudflare, Inc. (NET) stock quote, history, news and other vital information to help you with your stock trading and investing.

Yahoo Finance
Show threadMichał "rysiek" Woźniak · 🇺🇦May 14

@Aissen @Signez and even if we factor in the pre-results speculation, the "we are laying off 20% of the crew because ✨AI✨" song and dance routine used to work very well to keep the stock price up; it seems to not work that well anymore, which is the point I am making.

And I am not the only person making that point:
https://fortune.com/2025/12/25/goldman-sachs-research-ceos-layoffs-stock-price/

Goldman Sachs expects layoffs to keep rising—and says investors are punishing the stocks of companies that slash staff

Analysts ran the numbers and found a surprising change in how layoff announcements are being received by the market.

Fortune
Show threadAnisseMay 14
@rysiek @Signez if this proves to be a thing over time I'll be very happy. I just think it's too soon, mostly because the way the markets behave is often irrational. Even then, the most important is that the C-suites believe it to be true.
Show threadMichał "rysiek" Woźniak · 🇺🇦May 14

@Aissen @Signez the piece I linked is from December. It is based on Goldman Sachs analysis – a company which is heavily invested in "AI" and has all the reasons to hype it. And yet…

CloudFlare is far from the first instance of this.