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Meta and Microsoft each confirmed plans to reduce headcount next month as they continue their aggressive investments in artificial intelligence.
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The tech sector has been hit particularly hard by AI-linked layoffs due to factors including AI’s coding abilities, the sector’s massive investments in the technology, and “AI-washing.”
More techies are #opentowork as AI continues to shake up Silicon Valley.
Tech giants Meta (META) and Microsoft (MSFT) are both cutting thousands of jobs as they continue to spend tens of billions on AI. A Meta spokesperson on Thursday confirmed recent reports from Bloomberg and Reuters that the social media giant plans to cut 10% of its workforce, or about 8,000 jobs, next month. Also on Thursday, Microsoft reportedly announced an early retirement program that could reduce its U.S. headcount by 7%. A Microsoft representative on Friday confirmed the accuracy of those reports.
Both companies are spending huge sums to develop and run artificial intelligence. Meta expects capital expenditures to range between $115 billion and $135 billion this year, with the bulk of that going toward AI data centers. Microsoft does not forecast full-year capex but, halfway through its 2026 fiscal year, is on track to spend more than $140 billion. The tech giants are likely to update Wall Street on their investments when they report quarterly results next Wednesday.
The rise of AI agents and vibe coding has amplified simmering concerns that artificial intelligence will throw millions of Americans out of their jobs and hurt the economy. Research suggests AI has thus far had a limited impact on the labor market, but also that disruptions could broaden over time.
Tech workers have been hit hard by AI-driven layoffs this year. Social media company Snap (SNAP) announced earlier this month it would cut 16% of its workforce, citing greater efficiency due to “rapid advancements in artificial intelligence.” Amazon (AMZN), Block (XYZ), and Salesforce (CRM) have all cut upwards of 1,000 jobs this year. According to tech job marketplace TrueUp, the tech sector has lost about 104,000 jobs in 2026. At their current pace, this year’s layoffs could total 333,000, the most since 430,000 jobs were cut in 2023.
Some onlookers question the extent to which AI is responsible. Skeptics note that tech companies, under pressure from Wall Street to show AI investments are paying off in the form of efficiency, have an incentive to pin “right-sizing” job cuts on AI, a practice sometimes called “AI-washing.”
“While some may point to increased AI adoption as the key driving force behind the layoffs, our sense is that these announcements can be attributed to a renormalization in technology company employees after the sharp growth since the COVID-19 pandemic,” wrote analysts at Wolfe Research of this week’s Meta and Microsoft layoffs. Since the start of 2020, headcount has nearly tripled at Tesla (TSLA) and ServiceNow (NOW), and more than doubled at Salesforce. Meta, Alphabet (GOOG), and Microsoft—three of the companies investing most heavily in AI—have all grown their workforces by more than 50% in the past six years.
AI may not be eliminating jobs at the rate implied by layoff announcements, but that doesn’t mean it’s not a factor. Oracle (ORCL) began laying off an estimated 30,000 employees late last month. The company said earlier this year it plans to borrow up to $50 billion to fund AI investments that far exceed the cash generated by its software business. An internal memo pertaining to Meta’s recent layoffs reportedly called the cuts “part of our continued effort to run the company more efficiently and to allow us to offset the other investments we’re making.”
Researchers have found that AI-driven unemployment is, for now, concentrated in certain professions and age groups. Employment among early-career software developers has fallen steadily since 2022 while demand for older workers has grown, according to Stanford University’s 2026 AI Index. The same is true for customer service representatives, another job at which AI agents excel. Stanford researchers note that surveys suggest executives expect this trend to continue.
“Translation: The disruption is targeted and just beginning,” the researchers wrote.
—Kara Greenberg contributed to this article.
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