AI boom promised lower costs and bigger profits. Why are companies now cutting AI spending?

For the last few years, artificial intelligence has been sold as corporate survival. Companies across sectors promised faster work, leaner teams and higher productivity through AI tools. Employees were pushed to adopt AI coding assistants, automation software and large language models at breakneck speed.

The result was visible everywhere including layoffs in tech, hiring freezes in media and pressure on workers to “do more with less”. AI was positioned as the great cost-cutter of the modern workplace. But now, a new problem is emerging inside corporate boardrooms: AI itself is becoming extremely expensive.