Tech Giants Lay Off Thousands To Fund AI Investments

In the first half of 2025, the tech industry has witnessed a significant wave of layoffs, with major companies such as Microsoft, Google, Meta, IBM, PwC, and Chegg Inc. reducing their workforce by thousands. While the rise of AI is often blamed for these job cuts, experts suggest that the reality is more nuanced. These companies are strategically freeing up capital to invest in AI technologies, which require substantial funding. This shift is not just about replacing human workers with AI but also about restructuring to support AI initiatives.

Microsoft has been at the forefront of this trend, having laid off nearly 6,000 employees in May and an additional 9,000 in July, totaling almost 4% of its global workforce. CEO Satya Nadella has highlighted the company's AI transformation, noting that AI now writes 20% to 30% of Microsoft’s code. This transformation has sparked discussions about the future need for human engineers as the company allocates resources to fund an $80 billion AI infrastructure push this year.

Industry experts like Deedy Das of Menlo Ventures argue that these layoffs are more about freeing up capital for AI investments rather than AI directly replacing workers. Tech commentator Wes Roth echoed this sentiment, stating that the current restructuring is aimed at funding AI initiatives. This approach is mirrored across the sector, with companies like Amazon flattening management layers and prioritizing technical roles over administrative ones.

IBM has also made significant cuts, reducing around 8,000 jobs in HR and other departments as AI tools take over routine administrative tasks. However, the company is simultaneously hiring more engineers and salespeople, indicating a shift toward roles that require creativity and complex decision-making. Google and Meta have also made substantial cuts, with Meta laying off 3,600 employees at the start of the year and Google reducing hundreds of roles in its Android, Pixel, and Chrome teams. Both companies cite the need to streamline operations and invest in AI as key reasons for these layoffs.

PwC and Chegg Inc. have also joined the layoff trend, with PwC cutting approximately 1,500 jobs and Chegg reducing its workforce by 22% as students increasingly turn to free AI-powered study tools. As AI becomes more central to business operations, tech companies are redefining what productivity means. Tech CEOs and thought leaders have been outspoken this year about how AI is reshaping their sector, with the unambiguous message that at least some jobs are being fundamentally displaced. There is still a debate about whether these jobs are being eliminated for good.

Meta’s Mark Zuckerberg said AI could be ready this year to “effectively be a sort of mid-level engineer,” capable of writing code. Andy Jassy said Amazon “will need fewer people doing some of the jobs that are being done today,” while Ford’s Jim Farley and Anthropic’s Dario Amodei separately predicted that AI is set to displace essentially half of all white-collar positions. It’s not all doomsday predictions. Bill Gates sees an era of “free intelligence” coming as AI will become capable of handling most tasks. Nvidia’s said AI will “change everyone’s job — it’s changed mine.” The thousands of tech workers that have been laid off so far in 2025 are watching and waiting.