Freeing up Capital for AI Investment? Nearly 140,000 Employees Laid Off by U.S. Tech Giants This Year

While American tech giants are pouring vast amounts of money into artificial intelligence (AI) infrastructure, they are simultaneously initiating a new wave of large-scale business restructuring, with layoffs nearing 140,000 employees this year.

According to an analysis by the British Financial Times of company filings and data from the executive transition firm Challenger, Gray and Christmas, since early 2026, layoffs in the technology industry account for more than one-third of all announced layoffs across the United States. Among them, Amazon, Oracle, Meta, and Microsoft together have cut nearly 50,000 jobs, approximately 6% of their total workforce.

This trend of workforce reduction stands in stark contrast to the sector’s aggressive AI expansion. This year, the four major tech giants—Amazon, Alphabet, Meta, and Microsoft—are expected to spend as much as $725 billion in capital expenditures on infrastructure such as data centers. The massive cash outlay has begun to exert pressure on the balance sheets of some companies, and the market is increasingly scrutinizing the cash flow and returns on AI investment by tech firms.

Capital Restructuring and Credit Rating Pressure

Tech giants are freeing up funds for AI infrastructure construction by cutting headcount.

RBC analyst Rishi Jaluria pointed out that tech companies are compensating for earlier over-hiring by laying off employees and freeing up capital for AI investments. For example, Oracle plans to invest $70 billion in similar data center facilities to serve clients such as OpenAI. However, the heavy spending has sparked concerns in the credit markets. After carrying out layoffs in March, Oracle’s workforce at the end of fiscal 2026 decreased by 21,000 year-on-year. This month, S&P downgraded the company’s credit rating to just above junk level, citing weak cash flow and uncertainties around AI returns.

At the same time, these giants are drastically restructuring their previously targeted growth businesses. This month, Microsoft cut 4,800 positions, mainly in the Xbox gaming division, a reset following its $75 billion acquisition of Activision Blizzard three years ago. Rishi Jaluria commented that tech companies are “shifting from one bet to the next.”

The "AI Excuse" and the Over-Hiring Controversy

As restructuring advances, some tech executives attribute layoffs to productivity improvements brought by AI.

According to data from Challenger, Gray and Christmas, since May 2023, as many as 170,000 corporate jobs lost have been related to AI technology. In May this year, Block CEO Jack Dorsey laid off nearly half of the company’s 10,000-strong workforce and noted in a memo that AI is changing labor needs.

However, the academic community questions this logic. University of California, Berkeley economics professor Enrico Moretti believes that AI-related layoffs are more of an excuse by management to correct past decision-making errors. He points out that tech executives prefer to claim that AI has improved efficiency rather than admit to over-hiring during the pandemic, using it as an “easy way out.”

Market Performance and Industry Divergence

Investors have not positively priced layoffs justified by AI. Analyses from the British Financial Times show that within 30 trading days after announcing layoffs, tech companies attributing the cuts to AI significantly underperformed the Nasdaq by nearly 10%. In contrast, companies citing other factors trailed by only about 4%. To avoid negative market reactions, several major tech companies, including Amazon and Microsoft, have clearly stated that the expansion of AI technology is not the decisive factor behind their layoffs.

While traditional tech giants continue to scale down their non-core businesses, the AI-native employment market presents a starkly different picture. Startups focused on AI, such as Anthropic and OpenAI, are rapidly expanding their workforce, which partly cushions the impact of widespread tech industry layoffs. As Enrico Moretti puts it, employment in the AI sector is growing quickly; it’s only all other non-core business segments that tech companies are cutting back on.