Tech layoffs outpace 2025 as giants redirect spending toward AI
Layoffs in the tech sector in 2026 are already outpacing last year, and the numbers speak for themselves. But there is an important detail: they are not arriving at a steady pace. They are coming in sudden bursts.
From January through August, at least 94,046 workers were let go from tech companies in the United States, according to the Crunchbase Tech Layoff Tracker, which monitors American employers in the sector that are cutting jobs. That represents a 16.8% increase compared to the 80,486 recorded during the same period in 2025.
So what is driving these decisions? Unsurprisingly, a large share of the cuts came as companies redirected their spending toward artificial intelligence and restructured their operations to reduce costs. AI has become the central argument behind a significant portion of these layoffs, appearing in 33% of recorded layoff events this year, up from just 1% in 2024. It is not exactly straightforward to understand what is happening here, because the data hides a pretty interesting dynamic.
- The cuts are not arriving at a steady pace — they come in intense waves
- May 2026 was the heaviest month, with more than 31,500 layoffs
- June through August showed a significant slowdown
To get a sense of the rhythm, cuts dropped to 5,151 in December 2025, then shot up in January, surpassing 20,000. May was particularly brutal, with 31,513 layoffs, including Meta slashing 8,000 positions. It was the highest monthly count since March 2023, when cuts reached 36,602.
In other words, the financial performance of big tech companies remains strong, AI investments are booming, but teams are shrinking. And that raises the question everyone in the industry is asking right now 👇
Is artificial intelligence actually replacing people, or are companies using that argument to justify a restructuring that was already in the works?
The answer, as you will see, is more complicated than it seems.
Receive the best innovation content in your email.
All the news, tips, trends, and resources you're looking for, delivered to your inbox.
By subscribing to the newsletter, you agree to receive communications from Método Viral. We are committed to always protecting and respecting your privacy.
AI as an excuse or a real cause?
When a major company announces cuts and mentions artificial intelligence as part of the reasoning, the market tends to interpret it in two very different ways. The first reading is the most obvious: the technology is automating functions previously done by people, and those jobs simply ceased to exist. The second reading is more cynical, but equally valid: AI has become a convenient argument for a corporate restructuring that was already in the plans, regardless of any technological breakthrough. The problem is that, in practice, both things are happening at the same time, and separating one from the other requires looking beyond the official press releases.
Roger Lee, founder of Layoffs.fyi, has a pretty direct take on this. According to his tracker, 92,913 global layoffs, or 72% of the year’s total, were attributed to AI. Even so, he offers an important caveat. There has been little evidence that AI is actually replacing the work of the human employees who were laid off, Lee said about the biggest AI-attributed cuts this year. In his view, established tech companies are spending heavily on AI and cutting costs in other areas, hoping to boost productivity with smaller teams.
Big names like Microsoft, Meta, and Amazon announced layoffs in 2026 while, paradoxically, expanding their AI divisions and hiring engineers specialized in the field. This creates a confusing picture: at the same time they cut entire teams in support, customer service, marketing, and even traditional software development, these tech companies are investing billions in artificial intelligence infrastructure. It is the classic dance of hiring on one side and laying off on the other, but now with a new character in the middle of the story.
What the Crunchbase Tech Layoff Tracker data shows is that the mention of AI as a factor in layoffs jumped dramatically — from 1% to 33% in just one year. That does not necessarily mean 33% of workers were replaced by automated systems. It means companies started including digital transformation and AI adoption as part of the official layoff narrative, which is a very different thing. That difference matters a lot for anyone trying to understand the real financial performance of the sector and the impact of these changes on the tech job market.
Who is cutting the most
Just like last year, publicly traded companies dominated the layoff headlines in 2026, led by Amazon and Meta. According to Lee, large companies accounted for roughly 87% of all job cuts this year, a number similar to the 85% seen in 2025.
Amazon topped the list with 17,388 cuts through August, including the announcement of a 16,000-worker reduction in January and several smaller rounds after that. Meta came next with 10,400 layoffs, including the 8,000-position cut in May, which represented 10% of its workforce.
Close behind were Microsoft and PayPal, which let go of 4,800 and 4,760 employees, respectively. Block, Cisco, and Cognizant each recorded 4,000 layoffs, followed by Intuit with 3,000, Amdocs with 2,900, and Visa with 2,600. What is interesting is that this top-ten list spans quite varied sectors, including cloud computing, social media, payments, and enterprise technology.
A quick note about Oracle. According to reports, the company’s workforce shrank by roughly 21,000 employees in the fiscal year ending May 31, 2026. However, because the exact count and timing of each of those cuts were unclear, that total was not included in the tracker.
Among privately held companies, Epic Games recorded the largest disclosed number, with 1,000 cuts, followed by HR software provider UKG with 950, and MyHeritage with 500. These numbers are much smaller than the reductions at large public companies, although the lack of disclosure from many private firms limits the comparisons. Early in September, Uber reportedly laid off 3,300 workers, roughly 10% of its workforce.
What the numbers hide about the sector’s financial performance
Looking only at layoff volume without considering the companies’ financial context is a common mistake. Big tech firms are, for the most part, posting financial results above expectations. The announced investments in artificial intelligence infrastructure add up to hundreds of billions of dollars in capital commitments over the coming years. So when these companies lay people off, it is not because they are struggling. It is because they are aggressively redirecting resources, prioritizing what they believe is the future of the business.
This restructuring logic is nothing new. The tech sector has gone through similar cycles in 2001, in 2008, and more recently in 2022 and 2023, when the post-pandemic hiring spree gave way to a brutal headcount correction at major companies. What sets the current cycle apart is the speed at which the AI narrative was absorbed as justification and the way it is shaping HR strategy decisions on a global scale. For the first time, a specific technology is being openly cited as the reason for cuts in such a significant proportion of recorded layoff events.
The slowdown observed between June and August suggests the most intense pace of cuts may be losing steam, at least temporarily. During that period, cuts declined month over month, dropping to just 2,347 in August. In total, the June-through-August quarter tallied 19,331 layoffs, a 16.2% decline year over year. This could indicate that companies have completed the most aggressive phase of their internal restructuring, although it is still too early to call it a lasting reversal of the trend.
The focus on artificial intelligence
Andrew Challenger, from the consulting firm Challenger, Gray & Christmas, explains that AI is affecting jobs in two ways. Some tasks, like programming, can now be done with fewer people. There are jobs that are literally being replaced by artificial intelligence, he told Crunchbase News.
But companies are also shifting their priorities. They are putting more money into AI and cutting teams that work on other parts of the business. They are laying off people in one area of the organization while they may actually be hiring in an AI-focused area, Challenger said. That is why a company can announce layoffs and new job openings at the same time.
Not all roles within tech companies are being impacted the same way. Customer support, content moderation, basic data analysis, and parts of software development focused on maintaining legacy systems are among the hardest hit. On the other hand, professionals with expertise in machine learning, data engineering, AI systems architecture, and prompt engineering are in high demand. The same companies announcing cuts in one division are opening positions in another.
The problem is that this transition is not simple for the affected workers: the learning curve to move from a traditional role to an AI-focused role can take years, and the market does not wait for anyone at this pace of change. Startups are also feeling the impact, but in a different way than large corporations. Many of them are under pressure from investors to demonstrate operational efficiency, and artificial intelligence fits into that equation as a way to do more with fewer people.
But it is not all bad news, in Challenger’s view. There is a potential upside for programmers. If AI makes software development cheaper, companies in other industries might take on projects they previously could not afford. That could mean new jobs outside of tech, although it is still too early to know whether those positions will offset the ones being eliminated.
Interestingly, it seems some companies may be having second thoughts about their decisions. According to a Business Insider report, Amazon is reaching out to eligible former employees about open positions across the company, including in cloud computing and AI.
What to expect for the rest of 2026
With the data accumulated through August and the slowdown observed in the most recent quarter, the outlook for the coming months points to continued layoffs, but at a less intense pace than the May peak. Tech companies that have already gone through the most aggressive phases of cutting should enter a stabilization period, while others still adjusting their structures may announce new rounds.
The robust financial performance of major companies is a positive sign in the sense that they have the financial capacity to absorb transition costs and keep investing. But that does not automatically translate into job security for existing teams. Quite the opposite — the more companies bet on AI to gain efficiency, the more likely they are to keep reviewing their staffing structures on a regular basis. We are looking at a market that will demand constant adaptation, and the speed of that adaptation will be a real differentiator for professionals and companies in the years ahead 🚀
What becomes clear when you look at all this data together is that artificial intelligence is not just a technology being adopted by companies. It is becoming the central axis around which business decisions, investment strategies, and workforce planning are being made. And that fundamentally changes the conversation about the future of work in tech — far beyond what any previous cycle of cuts had ever done.
