Workday Slashes 400 Jobs Amid AI Shift

Workday Inc. announced it is cutting about 400 jobs, a move impacting roughly 2% of its workforce. The reductions will focus on customer-facing roles deemed non-revenue generating. This strategic adjustment aims to enable better investment in priority areas for the software company.

The company anticipates these job cuts will result in approximately $135 million in charges during the fiscal fourth quarter, which concluded in January. This follows a similar workforce reduction a year prior, also cited as a necessity for hiring in strategic sectors like artificial intelligence.

In parallel, Alphabet is making substantial investments in AI, projecting capital expenditures of up to $185 billion for the current year. This aggressive spending plan far surpasses analyst expectations and is intended to build the necessary data centers and infrastructure to maintain leadership in the AI era.

Alphabet's CEO Sundar Pichai highlighted that these AI investments are already proving fruitful, driving revenue and growth across the board. Search usage has reached unprecedented levels, with AI contributing significantly to this expansion. Google Cloud revenue also exceeded analyst forecasts, reaching $17.7 billion.

Google is heavily investing in its AI capabilities, including its Gemini model, to retain user engagement against emerging AI chatbots. This includes massive investments in data centers and chips to improve AI models and support cloud customers. Google is also supplying specialized AI chips to Anthropic and integrating Gemini into Apple's iPhones.

These substantial investments in AI infrastructure, research, and talent are crucial for Alphabet to compete effectively against major rivals such as Amazon, Microsoft, and OpenAI. The company aims to demonstrate continued momentum in its cloud and search advertising businesses to justify its heavy spending.