Even tech giants, widely regarded as the biggest winners in the AI-driven global economic expansion—such as Meta (parent company of Facebook and Instagram) and Microsoft—have recently announced workforce reductions. The fact that even AI beneficiaries like Meta are cutting jobs underscores that the layoffs aren't solely attributable to AI; the core driver remains efficiency optimization amid slowing economic momentum.
In an economy defined by uncertainty, AI hype, and geopolitical tensions, tens of thousands of U.S. workers are becoming casualties of mass layoffs at companies like Amazon (AMZN.US), United Parcel Service (UPS.US), and Nestlé (NSRGY.US). Last Tuesday, Amazon informed employees it would trim its corporate workforce by roughly 14,000 positions. This raises the question: Are workers being displaced by emerging technologies that risk rendering them obsolete?
Amazon CEO Andy Jassy clarified that the cuts are "not primarily financially driven, nor are they currently AI-driven—at least not yet." He attributed the move to corporate culture, explaining, "When you grow as rapidly as we did—scaling operations, headcount, locations, and business lines—you inevitably end up with more layers and redundancies."
However, Amazon’s latest earnings report reveals its heavy AI investments are paying off, with AWS cloud revenue surging 20%—the strongest growth in three years. The company also reaffirmed its $120 billion capital expenditure plan for this year, hinting at even larger outlays in 2025. Many Wall Street analysts interpreted the layoffs as a strategic shift toward AI-driven operational efficiency, given its revenue potential.
During the earnings call, Amazon highlighted adding over 3.8 gigawatts of data center capacity in the past year, with plans for another 1 gigawatt in Q4. Current capacity is double 2022 levels, with a goal to double again by 2027. The company emphasized that new AI data centers are "built for immediate monetization." Morgan Stanley projects AWS revenue growth will accelerate to 23% and 25% over the next two years, fueled by cloud AI demand.
Yet, layoffs at Amazon, UPS, and Target appear largely unrelated to AI. U.S. workers might feel whiplash: Just two years ago, job openings hit record highs amid the "Great Resignation" and wage growth. Indeed data shows tech/math job postings plummeted 36% below pre-pandemic levels by July 2024, a stark reversal from early 2022’s peak.
Georgetown economist Timothy DeStefano noted, "Amazon’s pandemic hiring spree made layoffs predictable. I see little evidence linking these cuts to AI." He added that recent announcements are unexceptional historically.
A Goldman Sachs survey of 100+ senior bankers found only 11% of U.S. firms are actively reducing staff due to AI—though deeper cuts may follow. "AI remains primarily a productivity booster with limited labor market impact outside tech," Goldman economists concluded.
Other major layoffs include UPS cutting 34,000 operational roles and 14,000 management jobs, Target eliminating 1,800 corporate positions, and Paramount Skydance (PSKY) shedding ~1,000 roles. Even Meta, an AI frontrunner, trimmed staff in its AI division, while Rivian reportedly downsized too.
Is this AI’s early labor-market footprint? Despite stable overall layoffs and mild October job gains (amid delayed government data), young workers face a "no-hire, no-fire" limbo, with long-term unemployment at a three-year high.
Wharton’s Matthew Bidwell acknowledged layoffs’ personal toll but framed them as part of capitalism’s "creative destruction." Some firms, like Chegg (cutting 45% due to ChatGPT’s impact) and Salesforce, openly tie reductions to AI efficiency gains.
"Early signs suggest AI may begin reshaping labor markets," Bidwell said, "but whether these layoffs reflect that trend remains unclear."