With news swirling about multibillion-dollar deals for artificial intelligence startups and multimillion-dollar AI worker salaries, it was a study from a small research nonprofit group that turned some heads in the tech world last week.

Its findings were simple but surprising: AI made software engineers slower.

“When developers are allowed to use AI tools, they take 19% longer to complete issues — a significant slowdown that goes against developer beliefs and expert forecasts,” the nonprofit group, METR, which specializes in evaluating AI models, said in its report.

“This gap between perception and reality is striking: developers expected AI to speed them up by 24%, and even after experiencing the slowdown, they still believed AI had sped them up by 20%,” the METR authors added.

The results may simply reflect the limits of current technology, they said — but they still offer a reality check for what is arguably the buzziest part of the broadly euphoric AI rush: coding.

In the past year, AI startups focused on generating software code have been the subject of an intense bidding war that has only escalated in recent weeks.

On Monday, AI coding company Windsurf was acquired by another AI startup, Cognition, after a deal with OpenAI reportedly fell through. Google poached Windsurf’s CEO while signing a $2.4 billion licensing deal. Cursor, which also focuses on AI code generation, was valued at $10 billion in a May funding round that brought in $900 million. Vibe coding — a style of coding that is entirely reliant on AI — has already become part of the tech lexicon, and discussions about the future of developer jobs can be found on most every online forum dedicated to tech.

AI talent, too, remains in high demand, with Facebook parent Meta offering multimillion-dollar paydays. LinkedIn found that “AI engineer” is the fastest growing job title among recent college graduates — with two related roles, data center technician and system engineer, coming in at Nos. 3 and 4.

The AI gold rush has come as overall job openings for software developers hit a five-year low earlier this year, raising questions about AI’s responsibility for the slowdown.

Among the most prominent firms announcing large rounds of layoffs has been Microsoft, whose CEO, Satya Nadella, has stated that as much as 30% of Microsoft code is now written by AI. Bloomberg News found that in a recent round of layoffs that occurred in Microsoft’s home state of Washington, software engineering was by far the largest single job category to receive pink slips, making up more than 40% of the roughly 2,000 positions cut.

While it’s clear that AI can write code, it’s far less certain whether the technology poses a direct threat to coding jobs in the short term.

In a paper released Wednesday, MIT researchers laid out the “many” challenges that still exist before AI can truly begin replacing software engineers wholesale.

The main obstacles come when AI programs are asked to develop code at scale, or with more complex logic, the authors found.

“Everyone is talking about how we don’t need programmers anymore, and there’s all this automation now available,” Armando Solar‑Lezama, an MIT professor and the senior author of the study, said in a press release. “On the one hand, the field has made tremendous progress. We have tools that are way more powerful than any we’ve seen before. But there’s also a long way to go toward really getting the full promise of automation that we would expect.”

What trouble exists in the current coder job market may have more to do with the broader economic slowdown than with abrupt technological changes, experts say.

“Teams are getting smaller,” said Heather Doshay, a partner at SignalFire, a venture capital firm that invests in AI companies. “Not necessarily because of AI, but because of market demands and operating expenses. What’s happening is companies are asking, ‘How can we stay lean and hire fewer people while still extending our runway financially?’”

However limited AI may be, many coders remain anxious. A popular website that tracks tech layoffs shows that the pace of separations has increased for the past three quarters after seeing steady declines over the previous six — though they remain well below a 2023 peak. On Blind, an anonymous message board app popular among tech workers, the topic of AI taking coding jobs is a hot one, with plenty of skepticism about whether it’s actually happening — or whether the narrative is an excuse that has allowed companies to cut staff.

Gareth Patterson, a 25-year-old New York City resident, says he was able to transition from a sales role into an engineering one only after putting himself through a grueling, nonstop studying regimen that came at the temporary cost of most of his social life, not to mention his workout schedule.

He says the payoff has been worth it because his salary now allows him to have disposable income in one of the most expensive cities in the world.

But he does not envy those trying to break in or even adapt to the new era.

“The expectations for an engineer are way up,” said a senior software engineer at a tax and auditing firm. “We’re now only seeing the top talent get hired. It’s intimidating.”