US Tech Sector Announces Its Highest Layoffs In Almost Two Years; The Reason Is…

The US technology sector reported its highest layoff figures in nearly two years during May 2026, with 38,242 job cuts planned, according to Challenger, Gray & Christmas Inc. This marks the largest monthly total since August 2024, as companies intensified investments in artificial intelligence. The sector has already announced 123,653 layoffs in 2026, a 65% increase compared to the same period in 2025. AI has driven 87,714 of this year’s layoffs, accounting for 22% of all job cuts—a significant rise from the 54,836 AI-related firings reported across 2025. Andy Challenger, chief revenue officer at Challenger, Gray & Christmas Inc., noted that AI is reshaping the labor market, with technology firms citing it as the leading reason for workforce reductions. Despite the layoffs, the tech sector remains a top hirer, with 11,250 planned positions in May 2026, though totals still lag behind pre-2024 levels. The broader private sector saw a 7% drop in layoff announcements over the past five months compared to 2025, reflecting a cautious hiring environment. Major tech companies have led the cuts. Meta laid off 10% of its workforce and reassigned 7,000 employees to AI-focused roles, while Cisco fired 4,000 staff, attributing the moves to AI adoption. Cloudflare CEO Matthew Price announced a 20% workforce reduction, eliminating roles in operations, middle management, and finance as the company expanded AI usage. The data underscores a dual trend: tech firms are aggressively scaling back non-core roles to fund AI development while continuing to hire for specialized positions. The shift highlights AI’s growing influence on workforce restructuring in the industry.