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

“Businesses appear to be nearing a Cortés moment with artificial intelligence,” Zandi wrote on LinkedIn. “That’s my takeaway from fintech company Block’s move to slash its workforce by 40%. While Block didn’t explicitly pin the cuts on AI, it all but did.”

Zandi acknowledged the possibility that AI could be serving as a convenient cover story. “Of course, AI could be a smoke screen for other, less flattering reasons for the cuts,” he wrote, “but I suspect not.” And even if it were, he argued, the effect on the broader labor market may be the same, referring to Block’s stock surge following the announcement.

“Even so, it may not matter for the job market,” Zandi wrote, “as the jump in Block’s stock price signals to other companies that they will be rewarded if they follow suit.”

That dynamic—when one firm’s AI-driven restructuring is applauded by Wall Street, prompting peers to imitate it—is precisely the mechanism Zandi fears most. It’s not a single dramatic rupture, but a cascading series of rational corporate decisions, each one nudging the labor market closer to the edge.

“We’re not creating any jobs now, and there’s no AI productivity gains,” Zandi said at a recent virtual event on AI and the economy joined by economists from Goldman Sachs and Yale. “What happens when we get some productivity gains here? Doesn’t that mean job loss?”

His concern is a familiar one dressed in new urgency. For years, economists have debated whether AI would be a net creator or destroyer of jobs—a debate that has mostly played out in conference rooms and research papers while the macro data remained stubbornly stable. But Zandi argues that stability is masking a slow-motion transformation. The impact of AI is starting to “kick in” across the economy, he told Bloomberg in February, and it’s already visible in one place above all: hiring.​

Tech job openings are falling. Hiring rates broadly are weak. And layoffs across the economy recently hit their highest level since 2009—although Zandi makes the distinction AI’s weighing effect on the job market “is due to weaker hiring, not layoffs.” Meanwhile, the National Bureau of Economic Research reports over 80% of firms in recent surveys say there is no impact from AI on employment or productivity over the past three years—yet those same firms forecast AI will boost productivity by 1.4% over the next three years. That disconnect between falling hiring numbers and rising productivity is precisely what worries Zandi and why he considers this a watershed Cortés moment.

When productivity gains do arrive, companies won’t ease into them. They’ll act on them at scale—like Block, cutting headcount, consolidating workflows, and deploying AI agents across functions that once required entire teams. That, in Zandi’s framing, is the Cortés moment: not when companies start investing in AI, but when they commit to it so fully that reverting to the old model becomes unthinkable.

The financial infrastructure of that commitment is already in place. The 10 largest AI companies are on track to issue more than $120 billion in bonds—a record high that many are drawing parallels to the debt Big Tech took on during the dotcom boom of the late 1990s. Unlike that era, when the Y2K bubble’s collapse was largely absorbed by equity investors, today’s AI buildout is being financed with debt, meaning a market correction would ripple well beyond stock portfolios.

In a Moody’s report, Zandi has laid out four possible futures for the AI economy in 2026: a smooth AI-empowered productivity-led expansion (40% probability), a jobs upheaval in which adoption outpaces labor market adjustment (20%), a scenario where AI falls flat and triggers a correction (25%), and a 1990s-style productivity boom (15%). The most likely outcome, he believes, is navigable, but none of them are cost-free.​

The labor market, for now, has one remaining buffer: health care, which has been the economy’s primary job-creation engine. “Without health care,” Zandi told Business Insider, “the economy would be losing lots of jobs.”​

Cortés won his gamble. His troops, with no ships to sail home on, had no choice but to fight forward. Corporate America, Zandi implies, may soon find itself in the same position—committed not by decree, but by the sheer weight of investment, debt, and competitive pressure. The boats, in other words, are already smoldering.