Intuit’s 17% workforce cut shows how AI disruption arrives quietly, then all at once.
KEY TAKEAWAYS
Intuit reported strong headline results, including revenue growth, an earnings beat, and raised full-year guidance. The stock still fell sharply because investors focused on what was beneath the surface.
The company announced 3,000 layoffs, equal to 17% of its workforce, alongside major AI partnerships with OpenAI and Anthropic. Management said the layoffs were not about AI, but the timing makes that hard to swallow.
TurboTax guidance was trimmed even as full-year guidance rose. That suggests the company’s flagship moat may be narrowing.
AI disruption is spreading across technology companies through layoffs, attrition, and restructuring. The shift is not showing up as a labor market collapse, but as a slow decline in replacement hiring.
The Fed may not be equipped to respond to structural labor displacement. Rate cuts can help cyclical weakness, but they cannot make displaced workers suddenly relevant again.
MY HOT TAKES
The earnings beat was not the story. The restructuring charge, the AI partnerships, and the TurboTax guidance cut were the story.
CEOs are learning how to describe AI-driven labor replacement without technically saying “AI-driven labor replacement.” That is the corporate version of tap dancing on a wet deck.
Intuit is not just using AI. It owns the kind of proprietary financial data that can make AI brutally effective. That will ultimately be good for Intuit–not so much the labor market.
The labor market may look strong because traditional metrics are too blunt. Low hiring, low firing, and quiet attrition can hide a lot of structural damage.
The Fed can cut rates, but it cannot cut anyone back into relevance. Structural displacement is not a 25-basis-point problem.
You can quote me: “Another unsinkable software company was taking on water.”
What lurks beneath. I strangely found myself in the bow of a yacht traveling up New York City's East River last night. It was a dark and overcast night, but the dark water reflected the lights of the brilliant NYC skyline. More strangely yet, I looked over to the bowsprit–that's the very front–and thought of that iconic scene in the epic film Titanic where Kate Winslet stretches out her arms creating the illusion that she is flying over the ocean. Utter exuberance. I remember watching that scene and feeling an instant sense of discomfort. Everyone knows how the story of the RMS Titanic ends. However, how could Rose and Jack know? They were in the throws of passion, and the Titanic was–according to everyone–unsinkable.
My mind wandered further still. I was on a yacht full of my work colleagues–we were celebrating a birthday. I was reminded of Intuit's 20% drubbing yesterday after announcing a Q1 earnings beat the night before. Guidance was raised. Layoffs were announced. Another unsinkable software company was taking on water.
Let me walk you through what actually happened, because the headline numbers are almost deliberately designed to confuse you. Intuit reported $8.6 billion in quarterly revenue, up 10% year over year. Earnings per share came in at $12.80 against a Wall Street consensus of $12.57. The company even raised its full-year revenue guidance to between $21.34 billion and $21.37 billion, representing 13% to 14% growth for the year. On paper, this is a company firing on all cylinders–unsinkable. The results were from the peak of tax season–Intuit's best quarter by design–and the numbers delivered. Management had every right to pop a bottle.
Instead, they filed the paperwork to hand 3,000 people their walking papers.
That is 17% of the company's entire global workforce, gone. The restructuring tab will run between $300 million and $340 million, and the charges land squarely in Q4. CEO Sasan Goodarzi sent an internal memo to staff explaining the move. He talked about reducing complexity. He talked about sharpening focus. He named Anthropic and OpenAI as the company's new strategic partners–multi-year deals, embedded AI models running through TurboTax, QuickBooks, and Credit Karma. Then he went on CNBC and told the anchor, with a straight face, that none of the layoffs had anything to do with AI.
That last part, my friends, is the tell. It was very much on my mind as we steamed beneath the iconic Brooklyn Bridge last night.
When a CEO announces a massive AI partnership on the same day he fires 17% of his workforce, and then walks into a camera and says the two things are unrelated, he is not lying exactly. He is doing something more elegant. He is performing the legally defensible version of the truth. Because here is what he cannot say–what no CEO in his position can say–which is that the humans being shown the door are being shown the door precisely because the machines are moving in. You do not pay $300 million in restructuring charges and sign multi-year contracts with the two most powerful AI companies on earth because you are reorganizing a few middle management layers. You do it because you have looked at your cost structure and made a decision about which parts of it have a future.
Intuit sits on petabytes of the most valuable financial data in the country. Decades of tax returns, small business bookkeeping records, credit profiles. It is not a software company that stumbled into AI. It is an AI company that has been training on your financial life for years and is only now getting around to admitting it. That data advantage is exactly why the OpenAI and Anthropic partnerships are so interesting, and so threatening at the same time. Intuit is not just licensing models. It is embedding its proprietary financial intelligence into Claude and ChatGPT, which means that the same tools coming for its workforce are also coming for the accountants and tax preparers and bookkeepers who built their entire professional identities around services that Intuit's products helped commoditize in the first place. The disruption is fractal. It compounds at every level.
The market understood all of this in yesterday’s session. Shares finished down 20% on the day, erasing roughly $21 billion in market value in a single session. The stock has now lost more than half its value in 2026, sitting nearly 60% below its all-time high reached just last summer. Investors who took the earnings beat at face value in after-hours trading Wednesday woke up Thursday to discover that the market was reading a different document entirely–one that said TurboTax revenue guidance was quietly trimmed even as the full-year headline number was raised. That downward revision to the flagship product is the real story. The moat is narrowing.
And Intuit is not alone in the water. Block cut 4,000 jobs in February, and Jack Dorsey wrote in a shareholder letter that AI tools had fundamentally changed what it means to build and run a company. Meta cut 8,000 workers the same week Intuit made its announcement. Oracle eliminated more than 10,000 positions after a record revenue quarter. More than 140 technology companies have now cut a combined 111,000 jobs so far in 2026, and in an increasing share of those announcements, the companies are no longer hiding behind vague language about efficiency and restructuring. They are naming the machine. AI cited as a contributing factor in layoff announcements has gone from less than 8% of announcements in 2025 to more than 20% in the first quarter of 2026 alone. The acceleration is not subtle.
Here is the part that should keep you up at night, and I say this as someone who spends a lot of time thinking about what the headline labor numbers are and are not telling us. The unemployment rate sits at 4.3%. Monthly payrolls continue to print positive. On the surface, the labor market looks resilient. Beneath the surface, what economists have quietly started describing is a freeze with low hiring, low firing, suppressed quit rates. Companies are not laying off workers en masse in ways that show up in the WARN filings. They are simply not replacing the ones who leave. They are letting headcount drift downward through attrition while quietly signing the AI contracts that will eventually make the question of replacement moot. The disruption does not arrive as a collapse. It arrives as a slow exhale.
The Fed is watching this and doing the monetary policy equivalent of looking at the stars through a periscope. Its own researchers recently published findings suggesting AI has not yet meaningfully reduced job postings in aggregate. Technically accurate. Also beside the point. Rate cuts are the playbook for cyclical unemployment. The kind caused by demand shocks that reverse when credit loosens and consumers come back. They are not the playbook for structural displacement, for an entire category of labor that does not bounce back because the technology that replaced it does not go away when the Fed funds rate moves 25 basis points. The Fed cannot refinance a displaced tax preparer back into relevance. And with inflation still elevated and the energy complex snarled by geopolitical risk, the Fed does not even have the luxury of trying.
Rose and Jack did not know what was coming. They were in the moment, feeling unsinkable, and the cold dark water was already rising in the lower decks. When I stood at the bow of that yacht last night watching the East River slide past, the skyline blazing above its own reflection, I was not thinking about the party behind me. I was thinking about what lurks beneath the surface of the most resilient-looking labor market in modern history–and whether the people steering this ship have any idea what they are about to hit.
YESTERDAY’S MARKETS
Equities finished higher yesterday despite a volatile session driven by whipsawing oil prices and shifting signals out of Iran. The Dow Jones Industrial Average closed at a record 50,285, gaining 0.55%, while the S&P 500 added 0.17% and the Nasdaq edged up 0.09%. Brent crude fell more than 2% to settle at $102 a barrel after an intraday spike, as Secretary of State Rubio cited "encouraging signs" in US-Iran negotiations. The 10-year Treasury yield eased slightly to 4.57%.
NEXT UP
University of Michigan Sentiment (May) is expected to come in at 48.2 in line with earlier estimates.
Next week: still more earnings along with Consumer Confidence, GDP, PCE Price Index, Personal Income, Personal Spending, and Durable Goods Orders.
Fed Governor Chistopher Waller will speak today.
Markets are closed on Monday Memorial Day.