Teradata, a US-based cloud software company, has informed its 5,100 employees that they will not receive annual salary hikes in 2026.
The decision was made to shift the compensation budget towards artificial intelligence investments, with the company saying its priority for the year is to strengthen its position in the AI market, according to reports citing an internal memo from chief executive Steve McMillan.
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A CEO told employees they won't get raises in 2026 because the money is being redirected to AI
— non aesthetic things (@PicturesFoIder) June 4, 2026
Teradata CEO Steve McMillan told the company's 5,100 employees not to expect salary increases in 2026 as the budget is being redirected toward artificial intelligence initiatives pic.twitter.com/81oM72Nm8h
AI takes the lion's share
In the memo, McMillan said Teradata’s primary focus for 2026 is to “win in the market with AI” and that the company would finance that push by reallocating money from annual salary adjustments.
The announcement was made in January, though it has only recently come to light. The usual yearly increments at the company reportedly ranged between 2% and 4%, although they were not guaranteed.
A sizeable global software company told its workers not to expect an annual raise this year because it was putting that money toward AI.
— More Perfect Union (@MorePerfectUS) June 4, 2026
Teradata, with over 5,000 employees, sent a memo saying that it was going to focus on "winning the market with AI."
And the memo explicitly…
A gentler wrinkle in the pay packet
The salary freeze does not appear to eliminate all forms of employee compensation.
Workers may still be eligible for performance-based bonuses and equity awards, while the policy applies mainly in countries where regulations do not require employers to make market-aligned salary adjustments.
Teradata also said it remains committed to investing in AI to improve its products and services and stay competitive.
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Another chapter in the automation race
The move comes amid a wider pattern of companies linking employee payouts to AI spending.
TTEC paused 401(k) retirement contributions for its US employees through 2026 so it could fund AI-related tools, training and infrastructure.
Teradata's decision was made against a backdrop of rising tech-sector layoffs and broader pressure on company budgets. Many firms are increasing AI spending even as they face tighter financial conditions.
