Tech layoffs rise as companies cite AI and profits stay strong

In short: Tech companies are cutting jobs at a fast pace, often saying AI is the reason, while a smaller group tied to AI is gaining large wealth.

What's going on

A TechCrunch report says something confusing is happening in tech. Some companies are reporting strong revenue and profits, but they are still laying off large numbers of workers, and they often point to AI as the reason.

Layoff tracking site TrueUp estimates there have been 363 layoff events this year across tech companies, affecting nearly 150,000 people. That works out to about 974 people per day, and it is running 44% faster than last year, according to the report. Another tracker, Challenger, Grey & Christmas, said layoffs hit nearly 40,000 in the highest single month in two years, and AI was the most-cited reason for layoffs across industries for the third month in a row.

Some people doubt that AI is the main cause. The report points to Block, where the company cited AI during a major round of cuts, but CEO Jack Dorsey also acknowledged the company had over-hired during the pandemic. Venture capitalist Marc Andreessen also described AI as a “silver bullet excuse” for layoffs that may actually be about having too many employees.

At the same time, a smaller group of AI insiders is getting much richer. The report notes Cerebras Systems’ IPO, which briefly made its co-founders billionaires, and it points to big valuations around companies like OpenAI and Anthropic.

What to watch

This mix can create anger, like seeing a store cut staff while the owners celebrate record sales. Watch whether companies keep using AI as the public explanation for job cuts, and whether politicians and workers push for more transparency about what is really driving layoffs.

Source: TechCrunch AI