PayPal Bets on AI Amid Deep Restructuring

PayPal is framing its latest restructuring as a return to its roots as a tech company, and it is putting artificial intelligence at the centre of that pitch even as thousands of jobs are set to disappear.

On the company’s first-quarter earnings call, CEO Enrique Lores told investors that PayPal needs to “recommit to the fundamentals,” which, in his words, includes “becoming a technology company again.” For Lores, that means a broad AI-led overhaul of how PayPal builds products and runs its internal operations.

AI at the core of PayPal’s turnaround plan

Lores was explicit that PayPal is pursuing an AI-powered turnaround. He told analysts that leading companies differentiate by innovating, and that now is the time for PayPal to act. His plan involves modernizing the company’s tech platform, moving faster toward being “cloud-native,” and “aggressively adopting AI in our development processes.” According to Lores, that is intended to boost developer productivity and reduce time to market.

The comments also amounted to an admission that PayPal has not yet fully embraced AI internally. That stands out at a time when AI-assisted coding is one of the clearest commercial uses of the technology, and when other consumer tech companies have leaned in more visibly. Spotify, for example, has said that its top developers have not written a line of code since December, instead relying on AI tools. Across the industry, engineering teams are looking at metrics like “tokenmaxxing” tracking AI token usage as a proxy for how actively teams are experimenting with AI.

To coordinate its push, PayPal has created a new “AI transformation and simplification” team focused on its enterprise AI agenda. Lores said this group, which reports to him, is tasked with driving “function by function, process by process” AI-driven change across the company. He stressed that this is not just about layering AI tools on top of existing workflows, but about redesigning key processes to capture meaningful savings.

PayPal expects the combination of this AI transformation and organizational streamlining to deliver at least $1.5 billion in cost savings over the next two to three years, according to Lores. He characterized the ongoing layoffs as the removal of layers from PayPal’s organizational structure, with AI-enabled processes providing further efficiency gains.

The AI push is unfolding alongside a broader reorganization. PayPal recently announced that it is reshaping the company into three main segments:

• Checkout solutions and PayPal
• Consumer financial services, including Venmo
• Payment services and crypto

At the same time, PayPal is preparing for significant workforce cuts. Bloomberg reported that the company plans to eliminate around 20% of its staff over the next two to three years as part of its cost-savings drive, which would amount to more than 4,500 jobs. Company executives said on the earnings call that additional savings will come from applying AI beyond engineering to areas such as customer service, support operations and risk management.

Lores said he believes the changes AI will enable are “going to be very significant,” reiterating that the dedicated AI group will oversee how major processes are redesigned, rather than treating AI merely as a technology pilot. He noted that PayPal has already run many AI pilots and has seen what is possible, but argued that real impact will come from systematically rethinking workflows.

The timing of the announcement highlights a central criticism of AI adoption: that it can be tightly linked to cost cutting and job losses. In this case, PayPal was already under pressure to restructure. The company reported first-quarter revenue of $8.4 billion, up 7% year-over-year, and beat earnings expectations. But it also issued weak guidance for the second quarter, which sent the stock lower after the report. That comes on top of a prolonged post-pandemic slide that has dragged the stock down more than 80% from its 2021 peak and slowed PayPal’s growth.

Investors also pressed Lores on the future of Venmo, as PayPal’s new three-part structure separates it into its own consumer financial services segment. Asked whether that setup might pave the way for a sale, Lores answered that the current structure made the most sense for PayPal’s turnaround plan. However, he did not rule out future deals, saying his “number one priority is to maximize shareholder value.”

For now, PayPal is betting that a faster shift to cloud-native infrastructure and aggressive AI adoption from coding to customer support and risk can help it cut billions in costs, simplify its organization and rekindle its identity as a technology company. Whether that strategy satisfies investors and offsets the human cost of large-scale layoffs is likely to define the next phase of PayPal’s evolution.