4 reasons why AI won’t kill developer hiring, according to Piper Sandler

Piper Sandler asserts that fears regarding AI tools displacing developer jobs are overblown, instead predicting AI will boost hiring. The brokerage cites that developers spend only a small portion of their time coding, CIOs anticipate net hiring gains in engineering and DevOps roles due to AI adoption, and recent hiring slowdowns were attributed to cost-cutting, not AI, with a rebound now evident. Furthermore, new tax rules are expected to support software headcount growth. This positive outlook leads Piper Sandler to maintain a bullish stance on companies like GitLab and Atlassian, anticipating a favorable shift in the narrative around AI's impact on the developer workforce.

Analysis

Piper Sandler presents a contrarian, bullish outlook on the software developer labor market, positing that fears of displacement by AI are misplaced. The firm's analysis is supported by four key pillars: survey data from Microsoft indicating developers spend only 17% of their time on coding, with the remainder on tasks less susceptible to automation like debugging and planning; Piper's own 2025 CIO survey which reveals expectations for net hiring gains in engineering and DevOps roles driven by AI adoption; the observation that the 2024 slowdown in software hiring was attributable to cyclical cost-cutting, not AI, with data now showing a rebound; and a recent legislative change that makes domestic R&D hiring more financially attractive. Based on this multi-faceted view, the brokerage reiterates a bullish stance on developer-centric platform companies Atlassian (TEAM) and GitLab (GTLB), suggesting the market narrative could shift to view them as key beneficiaries of AI-driven productivity gains, rather than victims of disruption.

Key Decisions for Investors

• Investors should re-evaluate holdings in developer tool companies like Atlassian and GitLab, as the dominant narrative could shift from AI being a headwind to a tailwind for their platforms.
• Monitor upcoming software engineering hiring data and CIO spending surveys closely to validate Piper Sandler's thesis of a hiring rebound independent of AI displacement.
• Consider that the recent reversal of R&D tax rules creates a specific, positive catalyst for companies with significant domestic software development, potentially boosting their headcount and innovation capacity.
• Positions underweight in the developer tools space due to AI job displacement fears may warrant reconsideration, as the analysis suggests this risk is overstated and growth drivers remain intact.