US Tech Layoffs Hit a Two-Year High in May. But There’s a Catch: ‘The Labor Market Is Being Reshaped’

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US tech companies announced 38,242 job cuts in May, the most in nearly two years and more than any other sector, according to Challenger, Gray & Christmas. So far in 2026, the industry has announced 123,653 cuts, up more than 65% from the same period last year. Andy Challenger, the firm’s chief revenue officer, says AI is now the leading reason companies give for cutting jobs. “The labor market is being reshaped by technology in real time,” he told Bloomberg.

But here’s the twist: tech also holds the largest hiring plans of any sector. The same companies cutting workers are simultaneously spending at historic levels to build AI infrastructure. Google, Amazon, Microsoft, and Meta plan a combined $725 billion in AI capital spending this year, up 77% from last year.

The message is clear: The companies cutting the most are also hiring the most. They just want different people.