In 2026, numerous companies have already announced that they will be cutting jobs on a large scale. This is behind the mass layoffs at Walmart, Meta, Morgan Stanley & Co.
• Numerous corporations are cutting jobs on a large scale
• AI often cited as a reason
• Tech sector particularly affected by job cuts
Job cuts in large companies have already reached a very high level in 2026. Last month, U.S.-based companies announced 83,387 job cuts, a 38 percent increase from March, according to a Challenger, Gray & Christmas blog post. However, compared to April 2025, this represents a decrease of 21 percent.
In total, there were 300,749 layoffs in the U.S. in the first four months of this year. Even though this is a high rate, there were 602,493 layoffs in the same period last year, more than twice as many. The background here, however, is the second term in office of US President Donald Trump, who cut civil service positions on a large scale after taking office.
One of the main causes of the current ongoing job cuts is the trend towards more artificial intelligence. According to Challenger, Gray & Christmas, AI has been cited as the reason for 49,135 job cuts so far this year, making it the third most common cause of layoffs. AI accounts for around 16 percent of all job cuts planned for 2026.
Due to the rapid rise of artificial intelligence, most job cuts are also recorded in the tech sector: “Technology companies continue to announce extensive job cuts and top the list of layoff announcements in all industries. They often cite spending on AI and innovation as the reason. Regardless of whether individual jobs are replaced by AI, this at least applies to the funds allocated for this purpose,” said Andy Challenger, labor market expert and chief revenue officer at Challenger, Gray & Christmas in the blog article.
Recent examples
p> Hardly a week goes by now without new mass layoffs being announced at tech companies. The most recent example is the US network equipment manufacturer Cisco, which announced the reduction of thousands of jobs when it presented its figures last week. Shortly before, the US tech company Cloudflare had also announced in its balance sheet that it would lay off around 20 percent of its global workforce, citing the transition to the “era of agentic AI” as the reason, which made restructuring necessary.
In total, according to figures from Challenger, Gray & Christmas, 33,361 jobs were cut in the tech sector in April. In 2026, the number will total 85,411 layoffs – 33 percent more than in the previous year.
AI does not yet replace employees
Even though AI is one of the main causes of mass layoffs, Forrester Research points out in a January report that it is not yet the case that laid-off employees are being replaced by AI. Only 6 percent of U.S. jobs are expected to be automated by 2030: “While AI could account for 6 percent of total U.S. job losses, equivalent to 10.4 million jobs, widespread AI-driven job replacement remains unlikely because labor productivity would need to increase significantly for AI to replace human workers on a large scale,” the report says.
Nevertheless, AI also plays an important role in tech companies’ layoff decisions, Peter Cohan, associate professor of management practice at Babson College, tells Barron’s: “I think the real reasons are overstaffing and slowing growth during the pandemic, as well as the pressure to improve margins while investing a lot of money in AI.”
The fact is that numerous companies are investing enormous amounts of money in AI in order to expand the infrastructure for AI, develop new AI products, or to increase productivity. But in recent months it has also become clear on Wall Street that investors want to see that these investments pay off.
“If you look at the last three years, for most people, 2024 was about defining an AI strategy, 2025 was about starting testing, and now 2026 is really about demonstrating the return on those investments,” Francesca Luthi, a former global operations executive and board advisor, tells Barron’s. “So at this point, downsizing offers an opportunity to realize those savings and strengthen the bottom line.”
Layoffs are likely to continue
Against this background, the layoffs based on AI are unlikely to stop any time soon. But it’s not just tech companies that have seen many cuts this year: the US government is also continuing to make major cuts. Federal, state and local authorities announced plans to cut 9,149 jobs, writes Challenger, Gray & Christmas. For the year as a whole, the sector announced 11,419 layoff plans. However, compared to the mass layoff madness last year, this corresponds to a decline of 96 percent – 282,227 were planned by April 2025.
Mass layoffs do not stop at the warehouse industry either. 5,743 job cuts were announced here in April, bringing the number to 10,512 jobs in 2026. There were also job cuts in the service sector, namely 4,110 in total, bringing the number of layoffs to 10,797 so far in 2026.
There were also increased job cuts in these sectors: pharmaceuticals, chemicals, industrial goods, media and news.
In addition to AI, the main reasons given for layoffs this year are company closures, restructuring and loss of orders. However, the general economic and market environment is cited as the most important reason.
Martina Köhler, editorial team at finanzen.net
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