Value traps almost always look strongest right before the market fully reprices them:
- Blockbuster still had huge revenues while Netflix was already destroying the economics of physical rentals,
- Borders kept reporting solid sales while Amazon quietly absorbed the future of retail.
Revenues and management optimism tend to lag disruption by years, equity markets usually react much earlier to deteriorating long-term economics. So the question is whether repeated AI-driven layoffs reflect genuine moat expansion or a company realizing that future growth increasingly depends on permanent labor compression because parts of its core business are becoming commoditized.
“We are investing heavily in AI” can describe the next dominant platform. It can also describe the opening stage of a very sophisticated value trap.