Box CEO Aaron Levie warns of ‘AI psychosis’ in the C-suite

NEW YORK, UNITED STATES — Box CEO Aaron Levie has a name for the pattern behind 2026’s AI-driven layoffs: “AI psychosis” — a condition he says afflicts executives who see only AI’s best-case demos while disconnected from the operational complexity of deploying it at scale, Fortune reports.

CEOs see the demo; workers live the deployment

“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 (formerly Twitter). 

He said senior leaders see only what he calls the “happy path” — the positive demonstration of what AI can produce — without accounting for the verification, integration, and workflow steps that turn a demo into a reliable production system.

“When they play with AI, they see the happy path results, often not considering the next 10 or 20 things that have to happen to get sustainable results from agents,” Levie wrote — a disconnect he argues is driving premature, poorly calibrated workforce reductions across tech.

2026 tech layoffs already near 2025’s full-year total

Levie’s prescription for AI psychosis is counterintuitive. 

“Use AI a ton, to figure out the real implications of agents in the enterprise, and come out the other side with an appreciation for both the upside and the real work that goes into them,” he wrote.

115,430 workers were laid off from 152 tech companies in just the first five months of 2026 — a figure that nearly matches the 124,636 cut in all of 2025.

A Gartner study of 350 executives found 80% of those piloting AI reported workforce reductions, regardless of whether the technology had delivered returns.

A 2025 Rev survey found heavy AI users encounter three times more hallucinations and spend nearly 10 times longer getting answers — evidence that the “last mile” complexity Levie describes is both real and measurable.

The AI psychosis diagnosis carries a direct read for BPO. When CEOs cut headcount based on what AI demos promise rather than what deployments deliver, they create operational gaps that offshore providers are called to fill. 

BPO operators who can speak to the last mile Levie describes — verification, exception handling, and human oversight of agent output — are positioned to serve both companies that cut too fast and those trying to deploy AI without gutting their operational backbone.