Mark Zandi, chief economist at Moody’s Analytics, asked the Spanish conquistador Hernán Cortés—who burned his ships upon arriving in Mexico in 1519, eliminating any possibility of retreat—to describe the posture he believes corporate America is quietly considering in adopting AI. Companies are investing heavily, making structured bets, and cutting off their own escape routes. Whether that leads to conquest or disaster, Zandi suggests, may depend on the weather. The analogy crystallized for Zandi after the fintech company Block it announced that it had reduced its workforce by 40%.

“Businesses seem to be approaching a Cortes moment with artificial intelligence,” Zandi wrote on LinkedIn. “That’s my takeaway from fintech company Block’s move to cut its workforce by 40%. While Block hasn’t clearly made the cuts to AI, it’s all but done.”

Zandi recognized the possibility that AI could serve as a convenient cover story. “Of course, AI could be a smokescreen for other, less flattering reasons for the cuts,” he wrote, “but I suspect not.” And even if it is, he argues, the impact on the broader labor market will be the same, referring to the rise in Block’s stock after the announcement.

“However, this is not important for the job market,” writes Zandi, “as the jump in Block’s stock price signals to other companies that they will be rewarded if they follow suit.”

That dynamic—where a company’s AI-driven reinvention is applauded by Wall Street, prompting peers to emulate it—is precisely the mechanism Zandi fears most. This is not a dramatic rupture, but a series of rational corporate decisions, each one pushing the labor market closer to the brink.

“We’re not doing any work right now and getting no AI productivity,” Zandi SAYS at a recent virtual event on AI and the economy attended by economists from Goldman Sachs and Yale. “What happens if we get some productivity gains here? Doesn’t that mean job losses?”

His concern was a familiarity that wore a new urgency. For years, economists have debated whether AI will be a net creator or destroyer of jobs—a debate mostly played out in conference rooms and research papers while the macro data remains solid. But Zandi argues that stability hides a slow change. The impact of AI is starting to “kick in” throughout the economy, he said Bloomberg in February, and it can be seen in one place above all: hiring.​

Tech jobs are falling. Hiring rates are generally weak. and removing the entire economy recently hit their highest level since 2009 — though Zandi made the distinction that AI’s weighing effect on the job market “is due to weak hiring, not firing.” Meanwhile, the National Bureau of Economic Research reports More than 80% of companies in recent surveys say there has been no impact from AI on employment or productivity in the last three years—but the same companies predict that AI will increase productivity by 1.4% overall. nEXT three years. The disconnect between declining hiring numbers and increased productivity is exactly what worries Zandi and why he considers this a watershed Cortés moment.

When productivity gains come, companies don’t take them lightly. They will do this at scale—like Block, cutting headcount, consolidating workflows, and deploying AI agents in functions that previously required entire teams. That, in Zandi’s framing, was the time of Cortés: not when the companies GETTING investment in AI, but when they PROMISE it is absolutely impossible to return to the old model.

The financial infrastructure for that commitment is already in place. the Ten largest AI companies on track to issue more than $120 billion in bonds—a record high lot drawing parallel to the loan big technology happened during the dot-com boom of the late 1990s. Unlike that time, when the collapse of the Y2K bubble was largely absorbed by equity investors, today’s construction of AI is financed by debt, meaning that a market correction will be more in stock portfolios.

In a Moody’s reportZandi posits four possible futures for the AI ​​economy by 2026: a smooth expansion of AI-empowered productivity-led (40% probability), a job chaos where adoption outpaces labor market adjustment (20%), a scenario where AI falls flat and triggers a correction (25%), and a 1990s-style boom (15%). The most likely outcome, he believes, can be navigated, but none of it is free.that

The labor market, for now, has one remaining buffer: health care, which is the main engine of job creation in the economy. “No health care,” Zandi told Business Insider“the economy will lose a lot of jobs.”that