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Tech CEOs are apparently suffering from AI psychosis Julie Bort 5:30 AM PDT · May 27, 2026 There is a certain wildness in the tech industry these days that both mimics previous eras of large changes, like cloud computing (runaway costs in the early days), and is like nothing we’ve ever seen before (record revenues accompanied by mass layoffs).
One possible explanation: Tech executives, especially CEOs, are collectively suffering from delusions of AI grandeur. And at least one tech CEO has said as much out loud: Box founder Aaron Levie.
“CEOs are uniquely prone to AI psychosis because they’re sufficiently distant from the last mile of work that still has to happen to generate most value with AI,” Levie wrote on X .
CEOs “play with AI,” develop a prototype, or generate a contract, to use Levie’s examples, and then make the leap to believing agents can do the work.
But these top-level executives aren’t the people who have to review code, discover bugs, and identify calls to hallucinated libraries before software is deployed. They aren’t responsible for training AI models on a company’s idiosyncratic contract terms, nor do they have to spend days combing through contracts to find sneaky terms, as Levie indicates.
In other words, Levie’s theory posits, CEOs don’t really understand processes well enough to know what really can and can’t be automated. But that lack of knowledge doesn’t stop them from acting on their beliefs.
It’s important to note that Levie is not an AI hater. Quite the opposite. He mostly posts AI positivity on X to his 2.7 million followers, writing blogs titled “Headless software is the future” on how software built for AI agents is the way forward. He also puts his money where his mouth is, backing AI startups as an active angel investor.
So what are CEOs to do instead? Levie advises CEOs to use AI “a ton” to really see what it can and can’t do, “and come out the other side with an appreciation for both the upside and the real work.”
CEOs are uniquely prone to AI psychosis because they’re sufficiently distant from the last mile of work that still has to happen to generate most value with AI. So when they play with AI, they see the happy path results, often not considering the next 10 or 20 things that have… https://t.co/ne5mvJ4Rgx
I have enough faith in humanity to believe that there are CEOs out there attempting to do just that, but right now, they seem to be in the minority.
In just the first five months of 2026, the tech industry has had nearly as many layoffs as in all of 2025: 115,430 people have been fired from 152 tech companies so far in 2026, compared to 124,636 people let go by 275 companies in 2025, according to industry layoff tracker Layoffs.fyi .
And the bulk of companies have pointed to AI as a reason for cutting these jobs. Many argue that the biggest tech companies are AI washing , or crediting AI productivity gains in the past or future, when other business decisions and metrics are really driving the cuts.
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