Meta hikes AI spending forecast to $145B amid layoffs

Meta and Microsoft announced plans in the same week to shed a combined 20,000 or more positions, crystallizing an industry-wide pattern in which tech companies are cutting workers at the fastest pace since 2023 while pouring record sums into artificial intelligence infrastructure.

Meta disclosed in an internal memo on April 22 that it will lay off roughly 10% of its global workforce — approximately 8,000 employees — starting May 20, while also canceling 6,000 open positions. The memo, written by chief people officer Janelle Gale and first reported by Bloomberg, said the cuts were made "as part of our continued effort to run the company more efficiently and to allow us to offset the other investments we're making". Days later, on its first-quarter earnings call, Meta raised its 2026 capital expenditure guidance to between $125 billion and $145 billion, up from a prior range of $115 billion to $135 billion, as it builds out AI data centers.

The following day, Microsoft revealed its first-ever voluntary buyout program, offering separation packages to U.S. employees at or below the senior director level whose combined age and years of service total 70 or more. About 7% of the company's roughly 125,000 U.S. workers — up to 8,750 people — are eligible, CNBC first reported. "Our hope is that this program gives those eligible the choice to take that next step on their own terms, with generous company support," Chief People Officer Amy Coleman wrote in the memo. Eligible employees will receive details on May 7.

A Widening Industry Trend

The Meta and Microsoft announcements arrived amid a broader wave of tech workforce reductions. Oracle has cut between 20,000 and 30,000 positions in a restructuring focused on cloud and AI infrastructure. Amazon has laid off roughly 16,000 workers since late 2025. Dell shed about 11,000 jobs in its fiscal year ending January 2026, bringing its three-year total to 36,000 — a 27% decline in headcount. Snap cut 1,000 employees and 300 open roles in mid-April, with CEO Evan Spiegel citing AI's ability to "reduce repetitive work" in a public SEC filing. Nike followed on April 22 with 1,400 cuts concentrated in its technology division.

According to Challenger, Gray & Christmas, the tech sector recorded 52,050 job cuts in the first quarter of 2026 alone, a 40% increase from a year earlier. Nearly half of all tech layoffs this year have been explicitly attributed to AI.

Skeptics Question the AI Rationale

Not everyone is convinced AI is the true driver. Oxford Economics argued in a January report that "firms don't appear to be replacing workers with AI on a significant scale," suggesting instead that companies may be "trying to dress up layoffs as a good news story rather than bad news, such as past over-hiring". The research firm noted that attributing cuts to AI "conveys a more positive message to investors" than citing weak demand or bloated headcounts.

The market does appear to reward such framing. After Snap attributed its layoffs to AI in its SEC filing, the stock rose nearly 8% in a single session — its largest gain in months — as investors modeled $500 million in annualized savings. Stanford researcher Jeffrey Pfeffer has long described waves of tech reductions as "copycat" layoffs, arguing they rarely deliver the efficiency gains companies promise.

A recent paper from researchers at the University of Pennsylvania and Boston University frames the dynamic as a coordination trap: each company that replaces workers with AI cuts costs individually, but collectively they erode the consumer demand on which all firms depend. The researchers tested six policy remedies — including universal basic income and upskilling — and concluded that only a direct tax on automation could break the cycle.

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