In May, American technology companies announced 38,242 job cuts — the largest monthly figure in the industry in nearly two years. Since the beginning of the year, the IT sector has lost 123,653 positions, which is 65% more than the same period in 2025. The data was published by Challenger, Gray & Christmas, a company specializing in outplacement services.
But there is a detail that is easy to miss in headlines about "the largest in two years": that same sector leads the ranking of hiring plans. In other words, IT is simultaneously laying off the most people and planning to hire the most. This is not a contradiction — it is a portrait of what industry restructuring looks like from the inside.
"Technology is changing the labor market in real time. Artificial intelligence is now the main reason for job cuts that companies cite — and the primary industry referencing it is technology itself."
Andy Challenger, VP of Corporate Communications at Challenger, Gray & Christmas
What exactly AI is cutting
AI has become the most common documented reason for layoffs for the third consecutive month — across all industries, not just IT. Among specific examples: Meta cut around 7,000 people, a significant portion from content moderation departments, where, according to the company, AI systems surpassed humans in accuracy. Microsoft laid off nearly 6,000 employees in May, primarily from cloud infrastructure and customer support, where large language models have taken over first-level inquiries.
However, analysts warn against oversimplification. As Didi Das from Menlo Ventures notes, most layoffs are not about direct human-to-bot replacement, but rather about freeing up capital for AI investments — companies are essentially reshuffling their workforce, not simply reducing it. The combined AI spending of the biggest players this year is approaching $725 billion.
A reassuring comparison — but not entirely
Since the beginning of 2026, all industries combined have announced approximately 400,000 job cuts. This sounds alarming — but in 2025 for the same period, the figure was 700,000. That was inflated by mass layoffs in the federal sector. Layoff announcements also do not reflect in unemployment statistics: jobless claims are not rising proportionally, and May's employment report was expected to show a gain of 85,000 jobs.
- 38,242 — IT sector cuts in May 2026 alone
- 123,653 — cumulative IT layoffs since the beginning of the year (+65% year-over-year)
- $725 billion — planned AI spending by major tech companies in 2026
- 3rd consecutive month AI is reason #1 for cuts across all sectors
The key question is not "how many people were laid off," but which specific roles are disappearing without a chance of return — and what will happen to those 123,000 if hiring plans in the same sector require different qualifications. If tech companies do indeed implement their planned hiring by year's end, we will see whether this represents replacement or genuine growth — and what share of former employees will transition into these new roles.
