AI is so expensive that humans look cheap again

TL;DR: Reckless company spending used to look like private jets and $400 expensed sushi dinners at Nobu. Today, it’s a $113,000-a-month Claude invoice. AI bills at some companies are now running so high that human labor may actually be cheaper than the tech that was supposed to automate jobs.

What happened: It’s suddenly a bad time to be a CTO who went all in on AI. Last week, an Nvidia exec told Axios that the cost of compute for his team was “far beyond the costs of the employees.” Uber’s CTO told The Information last month that the company already burned through its full 2026 AI budget and is “back to the drawing board.” A recent Goldman Sachs research note put it bluntly: Companies are “overrunning their initial budgets for inference by orders of magnitude.” Some software companies are already spending roughly 10% of their total engineering labor costs on AI, according to Goldman. And that could soon match what these companies pay humans.

The big picture: Worldwide IT spending is expected to hit $6.31 trillion in 2026, up 13.5% year over year, per business and tech insights firm Gartner. Compute costs are ballooning as companies turn to agentic AI tasks that are more complex and expensive to run; AI labs have also raised prices or shrunk how much AI use a dollar can buy. It’s enough to make human workers look like a bargain.

Budgetmaxxing: Just a blink of an eye ago, sky-high AI bills were a flex. Some tech firms, like Meta, even had internal leaderboards where employees raced to see who could burn through the most tokens. Over 30 days, Meta workers reportedly ran through 60 trillion Claude tokens—which, based on a calculation by Fortune, means the highest-ranked user on the AI leaderboard could have spent over $1 million in a month.

Now, the AI bill is coming due. Yet plenty of tech companies are reallocating headcount costs toward compute anyway (with some, including Block and several Wall Street banks, explicitly saying it’s to replace workers). Meta and Microsoft alone announced over 20,000 job cuts in late April, both to focus more on AI investments—and additional layoffs are likely coming at Microsoft even after its quarterly revenue grew. (Meanwhile, here’s how the great AI replacement is going on the other side of the world.)

Bottom line: For months, every CEO with a microphone has been warning that AI is coming for your job. The math on that may not work out (and, unlike AI, human workers can actually be held accountable for their mistakes). It’s unclear when—or if—costs will fall enough for human replacement to become a smart corporate strategy. —WK