The technology sector experienced its most severe month of AI-related job cuts in May 2025, with 38,579 layoffs attributed to artificial intelligence according to Challenger, Gray & Christmas data. This represents the highest monthly total for AI layoffs since the outplacement firm began tracking layoff reasons in 2023, marking the third consecutive month where AI was the top reason for job cuts. Technology announced 38,242 cuts in May, its highest monthly total since August 2024, bringing the total to 123,653 so far this year, which is up 66% from the same point in 2025. AI accounted for 40% of all announced cuts in May, demonstrating how quickly the technology has moved up the layoff ledger as companies increasingly use AI as a reason to restructure and reduce headcount.
Uber revealed it was laying off 23% of its staff in the company's People and Places Division, which handles human resources, recruitment, workplace facilities and culture. The job cuts comprised less than 1% of the rideshare company's 34,000 employees globally. Cisco announced 4,000 job cuts, comprising almost 5% of its global workforce in early May, while the Silicon Valley giant posted its highest-ever quarterly revenue of $15.8 billion with a 12% increase from the previous year. PayPal put out plans to eliminate almost 20% of its workforce over the next two to three years, amounting to roughly 4,760 roles to cut costs and speed up AI adoption.
Meta announced it was firing 10% of its global workforce and shifting another 7,000 into roles geared towards AI initiatives. Intuit, the parent company of Credit Karma, TurboTax and QuickBooks, also laid off 3,000 employees, citing a need to streamline operations and denied that the decision was influenced by AI adoption. As reported by CNBC, Intuit CEO Sasan Goodarzi stated that the move was about becoming more effective. Companies like Quora, Coinbase and Cloudflare have also announced job cuts, with the cuts sparking concerns about whether generative AI can replace workers in many firms. Starbucks is tying part of tech-team bonuses to AI usage and anticipates roughly $400 million in restructuring charges associated with the company's "Back to Starbucks" push.
The layoff trend is creating economic ripples beyond the tech sector, with weekly unemployment claims reaching 225,000 for the week ending May 30, up 35,000 over the prior month. May's announced layoffs jumped 16% versus April, the third straight monthly increase, as companies face pressure on slowing cloud and chip guidance. IBM and other legacy software vendors are trimming headcount, with the Dow recently shedding more than 400 points on losses in IBM and Cisco Systems shares. The economic stakes are significant, as tech salaries at IBM, NVIDIA, and similar firms sit well above the average hourly earnings of $37.53 in May. Consumer sentiment already reflects this anxiety, with the University of Michigan index at 49.8 in April, down from 61.7 last July and squarely in recessionary territory. As one analyst noted, "anybody who's coding for a living is feeling it for sure," with each displaced engineer hitting consumer spending harder than the headline numbers suggest.
While AI layoffs dominate tech headlines, official labor market data presents a more mixed picture. Professional and business services job openings bounced in April according to BLS JOLTS data, even as hires and layoffs fell, suggesting employers may still be looking for workers but more slowly and selectively. Nonfarm payrolls rose by 172,000 in May, according to BLS data released Friday, above expectations, while the unemployment rate held at 4.3%. The gains were led by leisure and hospitality, local government, and health care, while tech-adjacent categories remained quieter. Information payrolls fell by 2,000, and professional and business services added just 6,000 jobs, while computer systems design and related services added only 1,700 jobs. Challenger itself framed the shift more narrowly, saying AI is not yet the "jobpocalypse" some predicted, with the signal indicating companies are increasingly using AI as a reason to restructure rather than signaling a broader labor market crack.
