Is AI Causing Tech Worker Layoffs? CEOs Say Yes—But the Reality Is More Complex

If you read a typical 2025 layoff memo from a tech industry CEO, you might assume that artificial intelligence (AI) is the main reason workers are losing their jobs. But the truth is more nuanced. Many companies are citing AI to assure Wall Street that they are becoming more efficient, even as they prepare for larger changes driven by AI.

A new report released Wednesday by career site Indeed shows that tech job postings in July were down 36% from early 2020 levels. While AI plays a role, it’s not the only or most direct cause of the slowdown. The launch of ChatGPT in late 2022 coincided with the end of the pandemic-driven hiring surge, making it difficult to pinpoint AI as the primary factor in the ongoing hiring slump.

“We’re in a period where the tech job market is weak, but so is the broader labor market,” said Brendon Bernard, an economist at the Indeed Hiring Lab. “In fact, tech job postings have declined at a pace similar to other sectors that aren’t directly affected by AI.”

The AI Pivot in Layoff Announcements

Despite the complex picture, many tech CEOs have tied their layoffs to an “AI pivot.”

• Workday CEO Carl Eschenbach framed layoffs as part of a broader transformation:

  “Companies everywhere are reimagining how work gets done. The rising demand for AI has the potential to drive a new era of growth for Workday.”

• Autodesk CEO Andrew Anagnost said the company was cutting 1,350 jobs (9% of its workforce) to redirect resources into AI investments.

• CrowdStrike CEO George Kurtz emphasized the need to accelerate execution and efficiency with AI, noting:

  “AI flattens our hiring curve and helps us innovate from idea to product faster.”

Global Layoffs, Global AI Shift

It’s not just a U.S. trend.

• Tata Consultancy Services in India announced 12,000 layoffs, describing the move as part of building a “Future-Ready” organization that can scale AI across clients and internal systems.

• Recruit Holdings, the Japanese parent company of Indeed and Glassdoor, cited AI-driven restructuring in its decision to cut 1,300 jobs.

AI Spending, Not Just Job Replacement

Big tech firms like Microsoft are laying off workers—about 15,000 this year—even as profits soar. CEO Satya Nadella said the job cuts were difficult but necessary to “reimagine the company’s mission” in the AI era.

Wall Street has welcomed these restructuring efforts, as companies justify massive investments in AI infrastructure—data centers, chips, and cloud services.

“It’s a double-edged restructuring,” said Bryan Hayes, strategist at Zacks Investment Research. “Tech giants are walking a fine line between managing headcount and leading the AI revolution.”

• Google recently announced it would increase its capital expenditure budget to $85 billion, a $10 billion hike.

• Microsoft is expected to issue similar guidance soon.

Hard to Track AI’s Role in Job Losses

While Microsoft’s layoffs improve its profit margin outlook for fiscal year 2026, it’s harder to assess what these cuts mean for tech workers more broadly.

“Will AI replace some jobs? Absolutely,” said Hayes.
“But it will also create new roles. Employees who can use AI to innovate will be in high demand.”

Meta Platforms (Facebook and Instagram’s parent company) is offering lucrative deals to attract top AI talent from competitors like OpenAI.

AI Talent Holding Up Better—But Not Untouched

Indeed’s report shows that AI-related jobs, such as machine-learning engineers, are still above pre-pandemic levels—but below their 2022 peak. Even AI-specific roles are subject to economic cycles.

Entry-level tech roles are suffering the most. Indeed found that tech hiring has fallen sharply in AI hubs like San Francisco, Boston, and Seattle, especially in marketing, HR, and admin roles—jobs vulnerable to generative AI tools that can automate routine tasks.

“The decline in hiring began before the AI boom,” Bernard said.
“But the shift in experience requirements—favoring workers with 5+ years of experience—is more recent.”

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