AI 'Psychosis': Are Companies Over-Relying on AI for Layoffs?

It seems the tech world is grappling with a new, perhaps unsettling, phenomenon: 'AI psychosis.' This term, coined by Box founder Aaron Levie, suggests a dangerous trend where companies are quick to replace human roles with artificial intelligence, often without a deep understanding of the jobs being eliminated. Levie argues that the very people making these decisions are often the least equipped to grasp the nuances of the work their employees perform.

This isn't just theoretical hand-wringing. We've already seen concrete examples. ClickUp, a project management platform, recently made headlines for cutting 22% of its workforce, explicitly stating that AI agents would take over those roles. This move has fueled broader concerns about the trajectory of tech layoffs, with 2026 figures already nearing the total for all of 2025. It paints a picture of a rapidly accelerating shift, driven by the perceived efficiency and cost-saving potential of AI.

But is this a sustainable or even wise approach? The 'AI psychosis' idea suggests a disconnect between the hype surrounding AI and the practical realities of its implementation. Replacing human expertise with algorithms might seem like a straightforward solution on paper, but it risks overlooking critical aspects of creativity, complex problem-solving, and the unique human touch that often drives innovation and customer satisfaction. As we continue to integrate AI into our workplaces, it’s crucial for leaders to approach these decisions with a clear-eyed understanding of both AI's capabilities and its limitations, ensuring that technology serves to augment, rather than simply replace, human potential.