Last week, there was significant movement in the tech sector when Microsoft announced another round of layoffs, becoming the latest major tech company this year to conduct large-scale job cuts, following Oracle's record of over 30,000 layoffs in March.
Almost every month since the start of 2026, tech companies both large and small have gradually laid off many employees. So far this year, the number has exceeded 166,000, with projections estimating the total layoffs will soar to 312,000 by year's end, surpassing the 246,000 positions cut in 2025.
Microsoft announced layoffs of over 4,800 employees despite reporting strong profits and continuing to invest heavily in AI, as have Amazon, Meta, Salesforce, and Cisco, who also cut staff in waves while their investment budgets keep rising unabated.
Matthew Prince, CEO of Cloudflare, a cybersecurity firm that has cut 20% of its workforce, stated, "What we are doing today is likely to become the norm for companies by next year."
Chuck Robbins, CEO of Cisco, which announced a 5% workforce reduction, said, "The companies that will win in the AI era are those disciplined in continuously reallocating investments to the businesses or projects with the highest long-term returns."
Currently, companies mention layoffs more frequently, especially when AI investments factor into the equation.
AlphaSense analyzed earnings calls across industries and found that in 2022—the year ChatGPT launched—mentions of "Layoffs" alongside "AI" in shareholder and investor meetings were fewer than five times per quarter. This year, those mentions have surged to over 100 times per quarter.
However, major tech companies have given similar explanations, "AI is not the primary reason for layoffs." Most cite "organizational restructuring" In some cases, companies have "reassigned employees to more critical projects."
The ongoing layoffs over recent years stem from companies rapidly hiring during the COVID-19 pandemic to handle increased workloads, but once things stabilized, the surplus staff had to be gradually laid off.
At the same time, AI has enabled automation of certain tasks, allowing organizational restructuring to improve operational efficiency and freeing funds to invest in costly AI technologies.
Although some companies are cutting large numbers of employees to adapt to the AI era, Joseph Fuller, a Harvard Business School professor, believes most companies would not announce major layoffs unless facing significant problems like financial distress.
Overall, Fuller believes many organizations prefer gradual, continuous workforce reductions, a strategy he calls "Continuous Tuning." He notes that over the past 25 years, companies have steadily cut costs leaving little excess to trim. Meanwhile, CEOs' concerns about competitors force constant strategic reassessment.
Another reason is "uncertainty" about how AI will ultimately transform work. Although AI agents are discussed as replacing many workers, many tools are still in development and have yet to create major change.
Carrol Chang, CEO of Andela, a platform matching tech talent with leading organizations, said, "In many cases, layoffs aren't due to AI fully replacing people but because boards pressure management to demonstrate how AI can improve efficiency without excessive costs, such as AI model usage fees or token costs."
However, most large companies have not yet reached a point where AI significantly reduces headcount. Instead, they see more value in investing in upskilling existing employees to effectively use AI.
Partly because finding deeply knowledgeable AI natives is very difficult. She said, "There are very few people deeply versed in AI, and when found, their salaries are very high."
Regardless of the cause, many employees face ongoing pressure from repeated layoffs, which become hidden costs for companies.
While smaller teams can reduce redundancies, streamline workflows, and cut middle management, many companies find they have cut too much and eventually must rehire for the same roles after expecting AI to take over the work.
Jeffrey Pfeffer, a professor at Stanford Graduate School of Business, said this layoff-and-rehire cycle incurs high costs, including severance, recruitment, training, and external hiring expenses.
If layoffs become an organizational strategy rather than an economic necessity, companies may underestimate the true value of what they lose.
Pfeffer stated, "Repeated layoffs create long-term uncertainty, causing skilled employees to quit voluntarily, while team cohesion and organizational knowledge gradually disappear."
He explained that even if companies rehire, coordination and communication will never be the same as when teams had worked together extensively.
Meanwhile, as AI takes on more responsibilities, companies increasingly need personnel who understand organizational context—processes, markets, competitors, customers, suppliers, and industry regulations—more than ever, making it essential to retain knowledgeable staff.
Nonetheless, statistics from Trueup show that despite ongoing layoffs by tech giants, they are also increasing new hiring. For example, Amazon currently has over 20,000 job openings while having laid off more than 34,300 employees over the past two years.
Sources:Business Insider,CNBC,Trueup
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