Tech Layoffs Hit 2-Year High as Companies Embrace AI

Technology companies in the United States announced 38,242 job cuts in May, an almost two-year high.

For the third consecutive month, artificial intelligence was the main reason cited by employers for these layoffs, outplacement firm Challenger, Gray and Christmas (CGC) said in a report issued Thursday (June 4).

“The labor market is being reshaped by technology in real time,” Andy Challenger, labor and workplace expert and chief revenue officer at CGC, said in the report. “AI is now the leading reason companies give for cutting jobs, and the primary industry citing it is technology. Technology, already the year’s biggest job cutter, saw its steepest month of cuts since early 2023, even as it remains the sector with the most hiring plans this year.”

So far this year, U.S. tech companies have announced 123,653 cuts, a 66% increase compared to the same period in 2025. The sector is the top source of layoffs this year “by a wide margin,” according to the report.

In all, U.S. companies announced 97,006 job cuts in May, up 16% from 83,387 job cuts in April, and up 3% from the 93,816 announced in May 2025. It was the highest month for layoffs since May 2020, when companies cut 397,016 jobs at the height of the COVID-19 pandemic, the report said.

Employers have announced 397,755 cuts so far this year, a 43% drop compared to the first five months of last year. However, the decrease is due to the sweeping government job cuts in the early days of the second President Donald Trump administration, according to the report.

“On top of the headline AI story, we’re seeing a sharp rise in cuts tied to acquisitions and mergers and a jump in bankruptcy-related losses, which tells me companies are restructuring aggressively as they reposition for an AI-driven economy,” Challenger said in the report.

Among the companies announcing AI-related layoffs last month were Meta (8,000 jobs), Intuit (around 3,000 jobs) and Groupon (400 jobs).

PYMNTS examined the trend in April after a series of layoffs in the FinTech space, reporting that AI is “already altering staffing requirements.” AI tools can write code, automate documentation, examine risk signals and manage client interactions, reducing the need for large teams in some functions.

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