Coinbase (COIN) CEO Brian Armstrong announced on X on Tuesday, May 5, 2026, at 5:55 a.m. Eastern that he has decided to lay off 14% of his employees. Not a great way to start Cinco de Mayo.
There are 3 big reasons why he believes this is the right move:
Join 200K+ Subscribers: Find out why the midday Barchart Brief newsletter is a must-read for thousands daily.Coinbase and crypto are still volatile quarter to quarter, although there is an upward adoption trend. The company is losing its lean and tenacious startup identity. He thinks its organizational structure has ballooned in an unsustainable way. AI-driven productivity is real and has drastically accelerated the deployment of production code and other tasks, especially from “non-technical” employees.
Armstrong goes on to explain:
“Over the past year, I’ve watched engineers use AI to ship in days what used to take a team weeks. Non-technical teams are now shipping production code and many of our workflows are being automated. The pace of what’s possible with a small, focused team has changed dramatically, and it’s accelerating every day.”
Now, AI-driven layoffs raise questions such as “Will this backfire?” “What will investors think?”
To answer the latter, shares were up almost 4% the morning the news broke before coming back down.
www.barchart.com To answer the former, I think companies like Coinbase may actually believe they can merge AI with their top talent to create a true competitive advantage. This is both controversial and becoming the norm, as Armstrong put it:
“AI is bringing a profound shift in how companies operate, and we’re reshaping Coinbase to lead in this new era. This is a new way of working, and we need to leverage AI across every facet of our jobs.”
Coinbase is a truly innovative platform led by a bona fide tech entrepreneur, and I am sure that Armstrong has personally witnessed Claude’s ability to do great things when wielded by someone who knows what they are doing.
However, macro data does validate the skeptics.
Career services firm Challenger, Gray & Christmas reported that 30,000 layoffs have been blamed on AI so far this year, after nearly 55,000 were attributed to the technology in all of 2025. Its chief revenue officer, Andy Challenger, said companies are “shifting budgets toward AI investments at the expense of jobs.”
He adds that AI isn’t replacing jobs entirely, but it is costing them. Not everyone is buying the narrative wholesale, either. Scale AI CEO Jason Droege has accused CEOs of using AI as an “excuse” to lay off workers, arguing that the technology is still too unreliable to make the high-stakes decisions humans make, particularly in finance.
On the other hand, when a company that has previously had no business leveraging AI decides to spend a fortune on consultants, slash their workforce, and then hire them back (like McDonald’s), it seems painfully obvious that AI-driven layoffs are the newest excuse for poor management or strategy and that they need an up-to-date scapegoat.
Top consultancy Gartner predicts that 50% of companies that attributed headcount reductions to AI will rehire for similar roles by 2027 — likely under different job titles, but fooling no one. As Kathy Ross, senior director analyst at Gartner, put it:
“While AI-driven layoffs have captured attention, the reality is more complex. Most recent workforce reductions were influenced by broader economic conditions rather than automation alone. As organizations encounter the limits of AI and rising customer expectations, they will need to reinvest in human talent to sustain service quality and growth.”
Whether Coinbase walks back these layoffs and rehires for those roles in the coming quarters remains to be seen, but it isn’t the first company in this position and it won’t be last. We will see whether investors buy the narrative or whether Coinbase’s strategic decisions pay off during its earnings call on Thursday, May 7.
On the date of publication, Justin Estes did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.