AI budgets are being cut. This is the moment to move.
The wave of companies cutting their AI budgets this summer is not proof that AI failed to deliver. It is proof that most of them deployed it badly. And it is the clearest signal yet that now, while almost everyone else retreats, is the moment to move.
If you are a senior leader reading the headlines about abandoned AI projects and feeling quietly relieved that you held back, that relief is the most expensive feeling in your business right now. The companies pulling back are not closing the door on AI. They are handing you a map of exactly what not to do, and most leaders are too busy feeling vindicated to read it.
What actually failed was leadership, not the technology
When a company announces it is cutting AI spend because the return was not there, the failure being described is almost never the tool. It is leadership, in the same way bad AI output is an accountability problem and not an AI problem. It usually takes two forms.
The first is that people were handed AI with no real training. Not a three-hour online course. Real training is a person nearby who answers the questions as they come and holds people’s hands through the discomfort. Think back to the first time a personal computer landed on your desk and the typewriter was taken away. Nobody knew how to set a margin or delete a line. We were not slow. We were untrained. AI is a far stranger arrival than that, because this tool answers back, and a tool that writes better than you do does not inspire confidence in an untrained person. It triggers insecurity. Hand it out with an instruction to “just use it” and you have not started a transformation. You have started a quiet panic.
The second failure is that nobody named the advantage. Let me give you the picture I trust most. As a boy playing baseball, I watched a weighted ring sit on the dugout floor for half a season. We stepped around it every game. None of us knew what it was for. Then one day a player from the other team slid it onto his bat, took a few heavy swings, pulled it off, and walked to the plate swinging a bat that now felt like nothing. He could hit anything. The advantage had been lying in front of us all season, useless, because no one had named it. That is what most companies did with AI. They put the most powerful tool of our working lives in front of their people and never showed them what it was for.
This is also where the runaway cost comes from, the cost the headlines blame. A trained person narrows quickly. They ask a broad question, then a sharper one based on the answer, then sharper again, closing in on what they need. Costs fall as the questioning gets better. An untrained person stays at the wide top of the funnel, asking general question after general question, all day, all month. The bill climbs and nothing lands. The expensive AI bill was not a technology problem. It was the sound of people who were never taught how to think with the tool. The numbers behave the same way: the P&L only moves after the leader does the work, never after the tool is simply switched on.
The retreat is the opening
Here is the part almost nobody is saying. The pullback is the best news a serious leader has had all year.
A year ago there was no map. Today there is. The market is now full of public, specific failure: which companies overspent, how large they were, where the money went, how the usage ran away. That is not bad news to a leader who is paying attention. It is a free education paid for by your competitors. You can sit down with that data and build a strategy that is sharper, more specific, and far cheaper than anything that was possible before the failures existed, the kind of project that actually moves through its three phases instead of stalling. You can decide which team uses which tool, where an open model fits, where a negotiated rate on usage belongs, and where to put the rails that the early movers forgot. Someone else’s failure is your map.
The timing is the whole point. The time to move is not when the market is charging. It is when the market is retreating. Right now the market is retreating and frightened. That is the opening, and openings close.
You cannot un-give the tool
There is one more reason the “AI was overhyped” conclusion is wrong, and it is the one leaders most often miss. Budgets are being cut. Usage is not.
The people in your organisation who learned to work with AI are not going back, in the same way we never went back to the typewriter once we had the PC. Cut the corporate licence and they will spend twenty dollars a month of their own money. Block it on the work computer and they will use their phone. Once a person has had the experience of doing in four minutes what used to take a month, you cannot take that back. The adoption you are looking at is already permanent. The only open question is whether it happens inside your strategy or around it, and that comes down to who you actually put in charge of it.
What an honest leader does on Monday morning
If any of this lands close to home, the first move is not to panic and cut. It is to find out whether it is you, and to use the tool itself to find out. That is the honest reckoning that has to come before any AI strategy, and it is rarely comfortable. By the end of a single morning you can know which team ran away with the spend, whether there were any rails at all, and where the real failure sat. More than half the time it sits in the same place: no rules, no training, no leadership.
And before you cut a single budget line, ask the question almost no one asks. What did the overspend actually buy? Sometimes a team blows the budget because they are about to ship in three months what should have taken three years. Going over budget is not automatically failure. Sometimes it is the first sign that something is working. Find out before you switch it off.
If you are leading your organisation through this, this is the kind of work I do with a limited number of senior leaders each quarter. Work with Thomas
Questions this article answers
Why are companies cutting their AI investment in 2026? Most companies cutting AI spend are not seeing poor returns because the technology failed. They deployed it without training their people and without rules on how it was used, so costs climbed while results did not. The cut is a response to a leadership failure, not a technology failure.
Is the failure of AI projects a sign that AI was overhyped? No. AI budgets are being cut while AI usage keeps growing. Employees who learned to work with the tool do not stop when a corporate licence is removed; they pay for it themselves or use their phones. Adoption is already permanent, which is the opposite of a technology that failed.
Why do AI costs run out of control in large organisations? Untrained users ask broad, general questions repeatedly, which consumes far more usage and produces weaker results. Trained users narrow their questions quickly and reach the answer with less waste, so their costs fall over time. The runaway bill is a symptom of missing training, not of an expensive tool.
Is now a good time to invest in AI, or should we wait? Now is the stronger moment to move, because the market’s recent failures have created detailed public data on what does not work. A leader can use that data to build a more specific and cheaper strategy than was possible before, while competitors are retreating. The time to move is when the market is hesitating, not when it is charging.
What should a leader do first when an AI initiative overspends? Before cutting the budget, find out where the failure actually sat, usually in the absence of rules and training, and use AI itself to get that answer within a morning. Then ask what the overspend bought, because a team that exceeded its budget may be about to deliver years of value in months. Cutting before understanding can switch off the one thing that was working.
Thomas Anglero is a Strategic AI Advisor (MerkabaPhi AS, Oslo), with 450+ keynotes across 30+ countries. Enquiries: anglero.com