Microsoft & Meta Reveal Large Layoffs Despite Massive AI Investment

As they make significant investments in AI, Meta and Microsoft are reducing their workforces by thousands, and CEOs assert that the technology is fulfilling their firms’ efficiency demands.

As part of a layoff plan created months ago, Meta informed employees on Thursday that it will reduce about 8,000 workers, or 10% of its workforce, on May 20 in order to increase productivity. Additionally, the corporation is closing roughly 6,000 available positions. On the same day, Microsoft made its initial announcement to staff members that approximately 7% of its approximately 125,000 American workers would be eligible for voluntary retirement.

Chief people officer Janelle Gale stated that the cuts will enable the firm to “offset the other investments we’re making” in an internal memo to Meta employees, without specifically mentioning AI. Mark Zuckerberg, the CEO of Meta, discussed a “major AI acceleration” during the company’s fourth-quarter 2025 earnings report. He mentioned plans to spend between $115 billion and $135 billion on AI, which is about twice the company’s capital spending from the prior year.

Gale wrote, “This is not an easy tradeoff.” She stressed that hefty severance compensation would be given to laid-off staff. 

Unlike Gale, Zuckerberg has stated clearly that AI is eliminating the need for some hiring. During the January earnings call, he stated, “We’re starting to see projects that used to require big teams now be accomplished by a single very talented person.”

Meta declined to comment further, but it did confirm news stories about the internal message and layoffs.

Meta also claimed to be cutting 10% of its global workforce, affecting about 8,000 employees, while leaving another 6,000 open roles unfilled, with impacted staff notified starting May 20, 2026, as part of a strategy to offset record AI-related capital expenditures forecasted to reach up to $169 billion this year.

Microsoft is offering voluntary early retirement buyouts to roughly 8,750 U.S. employees, about 7% of its domestic workforce, available to those at the Senior Director level and below with a combined age and years of service of 70 or more, marking the first such large-scale buyout since its founding in 1975, as the company redirects capital toward expanding its AI data centre network for services like Copilot.

According to the FT, Microsoft informed its staff on Thursday that it would be providing voluntary buyouts to long-term workers, especially those whose ages plus years with the company totalled 70 or more. The FT claims that around 8,000 workers would be eligible. A request for comment was not immediately answered by Microsoft. 

Microsoft predicted in July 2025 that it will invest about $100 billion in AI infrastructure during the upcoming fiscal year. That amount is currently estimated by analysts to be between $110 billion and $120 billion.

Microsoft’s AI head, Mustafa Suleyman, stated in February that he thinks AI will be able to replace the majority of white-collar jobs in the next 12 to 18 months.

Microsoft CEO Satya Nadella has praised the company’s internal AI deployment, claiming it has resulted in significant productivity increases. He stated in April 2025 that up to 30% of the company’s coding effort was done by AI.

In a January press release, he stated, “We are only at the beginning phases of AI diffusion, and already Microsoft has built an AI business that’s larger than some of our biggest franchises.”

The Microsoft CEO said this while Zuckerberg and Nadella were seated onstage. “Our bet is sort of that in the next year probably… maybe half the development is going to be done by AI, as opposed to people, and then that will just kind of increase from there,” Zuckerberg responded when Nadella asked him how much of the social media company’s coding was done by AI.

The two big companies’ announcements of layoffs coincide with the growing fear among tech workers that their employers will attempt to replace them with artificial intelligence. These anxieties are not unjustified. 

Workers themselves are being used as training data for AI algorithms. Meta is placing new software on American employees’ computers to record their mouse movements, clicks, and keystrokes to feed into AI training data, according to an internal memo that Reuters recently discovered.

Other businesses who are stepping up their AI efforts have also drastically reduced their numbers. Citing advancements in AI, Block CEO Jack Dorsey let off over half of the company’s personnel in early March. At least 30,000 employees have been let go by Amazon in the last six months after the company revealed intentions to spend an astounding $200 billion in a single year in February. Last month, Oracle, which is having trouble paying off the debt from its multibillion-dollar datacentre investment, informed its staff that thousands of positions would also be eliminated. 

Together, these moves reflect a “fundamental tension” in Big Tech, where companies are cutting human staff while investing record industry-wide sums, estimated at $600 billion to $725 billion in 2026, into AI development.