AI Now Costs More Than Human Workers, Nvidia VP Admits

The pitch for AI was simple: cheaper than humans, available 24/7, no benefits. The bill is telling a different story.

Nvidia vice president of applied deep learning Bryan Catanzaro told Axios that “For my team, the cost of compute is far beyond the costs of the employees”, a striking admission from inside the company selling the picks and shovels of the AI buildout.

The compute bill is eating the budget

Uber’s chief technology officer already blew through his full 2026 AI budget due to token costs, according to The Information. That is four months into the year, not twelve.

Worldwide IT spending is expected to reach $6.31 trillion in 2026, up 13.5 percent from 2025, according to Gartner. That increase is being driven by sustained momentum across AI infrastructure, software and cloud services, which includes everything from the AI buildout to the cost of AI subscriptions.

The MIT math problem

A widely cited 2024 MIT study looked at what it would take for AI systems to match human performance across different jobs and found that automation made financial sense in just 23% of roles that rely heavily on visual tasks. In the other 77% of cases, keeping human workers was still the more cost-effective option.

Because AI systems still suffer from factual errors, companies are forced to invest in an additional layer of skilled workers tasked with reviewing outputs. Instead of reducing headcount, firms often end up with both expensive software and human quality control staff.

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Capex up, headcount down

Big Tech has announced $740 billion in capex this year, but AI has yet to show evidence of widespread increased productivity. The spend keeps climbing even as the productivity case stays unproven.

Layoffs are running in parallel. According to data from Layoffs.fyi, there have been more than 92,000 layoffs in tech in 2026 so far across nearly 100 companies. The rate of these workforce reductions is already far outpacing that of last year, which saw about 120,000 layoffs in total.

Meta announced last week in a memo that it plans to lay off 10% of its workforce, about 8,000 employees, as well as scrap plans to hire for 6,000 open positions. Microsoft has offered thousands of its own employees a voluntary buyout, the largest the company has ever offered.

When does the math flip

The cost of using AI will become significantly lower, with performing inference for a large language model with 1 trillion parameters plummeting by more than 90% over the next four years, according to a report last month from analyst firm Gartner.

AI companies will also likely change how they price their tools, switching from a flat subscription to usage-based pricing, which could either accelerate or extend the squeeze on enterprise IT budgets depending on workload.

Options market and stocks to watch

Watch NVDA for any signs that enterprise customers are slowing GPU and compute orders if ROI pressure builds on hyperscalers and their tenants.

Watch MSFT and META for commentary on AI capex versus margin discipline, especially given the layoff backdrop and buyout offers.

Watch UBER for follow-through on whether blown AI budgets translate into guidance changes or cost-cutting commentary.

Watch GOOGL and AMZN for cloud segment growth driven by AI workloads, the other side of every customer’s rising token bill.

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