Tech Titans Slash 140K Jobs as AI Spending Soars

American tech companies have cut close to 140,000 jobs this year amid record artificial intelligence spending.

Those reductions account for more than a third of this year’s announced layoffs in the U.S., the Financial Times (FT) reported Sunday (July 26), citing its analysis of corporate filings and data from executive outplacement company Challenger, Gray and Christmas.

Nearly 50,000 of those cuts came from Amazon, Oracle, Meta and Microsoft, the equivalent of around 6% of their total corporate workforce, the report said. These companies, along with Alphabet, are projected to spend well over $800 billion on AI-related efforts this year, FT added.

As the FT noted, widespread layoffs have become de rigueur among Silicon Valley companies since the COVID pandemic hiring spree ended. Many of these firms have kept the cuts going while also investing heavily in AI infrastructure.

The report added that the situation is in contrast with the health of the larger jobs market. Hiring has cooled since the post-pandemic surge, but government data shows America’s unemployment rate at a low 4.2%.

FT also pointed to the mass layoffs earlier this year at Block, where CEO Jack Dorsey said AI was changing the company’s employment needs. However, the report added, some academics argue AI-related cuts give employers an excuse to remedy their mistakes.

“The typical attitude of tech executives has been to say that AI allows us to gain efficiency rather than admit that they overhired,” said Enrico Moretti, a professor of economics at University of California, Berkeley. “It’s an easy way out.”

At the same time, recent research from corporate card firm Ramp and workforce analytics firm Revelio Labs found that the companies spending the most on generative AI are expanding their staffing levels faster than the firms spending the least.

“AI adopters saw headcount rise 10.2% over the two years following adoption, gains the study attributed entirely to high-intensity spenders,” PYMNTS wrote in a report on the findings. “Low-intensity adopters saw no statistically significant change in headcount over the same period. Within high-intensity adopters, the entry-level headcount grew 12%.”

Meanwhile, some AI companies have begun walking back earlier predictions about AI-related job losses. For example, Anthropic CEO Dario Amodei said last year that AI could erase half of all entry-level roles, but has since taken on a more positive outlook.

“They can do the same thing with less resources, and that leads to things like layoffs, or they can do more with the same amount of resources,” he said, per a report from The Wall Street Journal. “But that requires creativity.”