Technology

Tech layoffs surge amid AI push — but there’s more to the story

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by Andrew Dorn - 04/28/26 10:39 AM ET

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by Andrew Dorn - 04/28/26 10:39 AM ET

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(NewsNation) — Tech layoffs have surged to their highest level in years, but cuts attributed to AI may be driven more by investment in the technology than by it replacing workers.

Nearly 90 tech companies announced layoffs affecting roughly 82,000 employees in the first quarter, up from about 30,000 a year earlier and the largest quarterly total since early 2023, according to the tracking site Layoffs.fyi.

Meta last Thursday said it will cut 10 percent of its workforce, or roughly 8,000 employees, as it looks to run more efficiently and offset other investments. That same day, Microsoft said it was offering early retirement to thousands of long-serving employees.

The workforce reductions follow similar moves by Amazon and Oracle and come as major tech companies pour hundreds of billions of dollars into AI infrastructure.

“Companies are shifting budgets toward AI investments at the expense of jobs,” Andy Challenger, chief revenue officer for Challenger, Gray & Christmas, said in a March report.

So far in 2026, AI has been cited as a factor in roughly 27,600 job cuts, or about 13 percent of all job cut plans, according to the firm — up from around 5 percent in 2025.

AI investment or job replacement? What’s driving tech layoffs

While the uptick in layoffs linked to AI is notable, it’s less clear that those cuts reflect AI directly replacing workers. Instead, they may be tied to the AI arms race, as tech giants shift spending from personnel to assets like data centers and other tools.

That narrative has been blurred by the companies themselves, eager to pitch a forward-looking AI story to shareholders rather than acknowledging past overhiring mistakes. The strategy has been dubbed “AI-washing” with companies exaggerating their AI adoption to appear more innovative.

In a recent interview, venture capitalist Marc Andreessen attributed recent layoffs to higher interest rates and a “complete loss of discipline” in hiring during the pandemic.

“The hiring binge that companies went on in COVID was just wild,” Andreessen said. “Essentially every large company is overstaffed.”

He added: “Now they all have the silver bullet excuse, ‘Ah, it’s AI.'”

Evidence of widespread job losses from AI-driven replacement remains thin, recent analyses show, though that may change in the years ahead.

According to Challenger, AI is the fifth most common reason for job cuts so far in 2026, trailing factors like market/economic conditions, restructuring and closures.

For workers, the AI jobs story cuts both ways: jobs may be lost to fund AI, even if the technology isn’t yet replacing them, but that also suggests the recent tech layoffs may be more cyclical than a sign of job obsolescence.

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