Q2 Earnings will be a disaster (yes, we have a few days left), and all this job cutting will continue throughout 2026.
There were no meaningful, needle-moving developments in Q2: no market-disrupting announcements, no material improvement in execution, and interest rates remain elevated. That last point matters because the company is carrying more than $20 billion in debt, making refinancing and deleveraging increasingly challenging. At current levels $35-38, this stock is not 'a bargain' - it is a value trap.
The bull case largely depends on achieving more than $3 billion in free cash flow by 2028. That assumes flawless execution over the coming years. That assumption is far too optimistic. The scale of the cost reductions (layoffs, outsourcing) has significantly increased execution risk, while higher interest rates will likely slow debt reduction more than current projections suggest.
Then there’s the AI narrative. So far, it looks more like hope than evidence. Many large enterprises have discovered that indiscriminately consuming AI tokens is one of the most expensive and least efficient ways to improve productivity. Until there are measurable business outcomes—not just promises—I don’t see AI materially changing the investment case.
If you’re still at the company and haven’t started exploring other opportunities, seriously consider doing so. The current management team is delusional and underestimates both the financial complexity of the turnaround and the challenge of rebuilding the execution engine after such deep cuts. Don't expect a meaningful recovery unless the board takes decisive action.
And if you were recently laid off, I’m genuinely sorry. While it may not feel like it today, there are strong companies looking for talented people. Hopefully, you negotiated a fair severance package. Take some time to recover, then focus on your next opportunity.