IT workers DONE?

The U.S. records the largest surge in tech layoffs in two years

The American technology industry is going through one of the most contradictory periods in its history. On one hand, the largest tech corporations are investing record sums into artificial intelligence, building data centers worth tens of billions of dollars, and engaging in a full-scale race for leadership in a new technological era. On the other hand, the tech sector has become the leader in layoffs in the United States.

According to consulting firm Challenger, Gray & Christmas, in May 2026 U.S. technology companies announced 38,242 job cuts. This is not only the highest figure among all industries for the month, but also the largest wave of layoffs in the tech sector in nearly two years.

By comparison, the total number of announced layoffs across all U.S. industries in May reached around 97,000. The transportation sector ranked second with 6,909 layoffs, while the services sector followed with 6,268 cuts. This means the technology industry significantly outpaced all other sectors in terms of workforce reductions.

At first glance, the situation looks paradoxical. Tech companies are currently in the middle of an investment boom. Many stocks in the sector are trading near all-time highs, while the artificial intelligence market continues to attract massive inflows of capital. However, this is exactly where the main reason lies.

According to Challenger, Gray & Christmas, artificial intelligence has been the most frequently cited factor behind layoffs for three consecutive months. The company’s CEO Andy Challenger stated that AI is increasingly becoming the primary explanation employers give when cutting jobs.

And this is not simply about replacing workers with algorithms. The process is far more complex.

Modern AI systems are capable of automating many tasks that were recently performed by programmers, analysts, support specialists, testers, and administrative staff. Code generation, document processing, data analysis, report creation, and even parts of customer support are increasingly handled by AI tools.

As a result, companies are restructuring their teams. Instead of hiring large numbers of employees, businesses are shifting toward smaller teams empowered by AI systems.

The changes are especially visible among mid-level employees. Where dozens of engineers were once required for a single large project, parts of that work can now be automated. One experienced specialist equipped with modern AI tools can accomplish tasks that previously required several people.

But layoffs are only one side of the story.

At the same time, major tech corporations are increasing investments to unprecedented levels. Analysts estimate that Google, Amazon, Microsoft, and Meta plan to allocate around 725 billion yuan in capital expenditures in 2026, equivalent to roughly $100 billion. This is about 77% more than the previous year. Most of this spending is directed not toward hiring, but toward building AI infrastructure: data centers, server farms, supercomputers, and purchasing the latest NVIDIA GPUs.

In effect, there is a massive internal reallocation of resources within the industry. Money that once went into workforce expansion is now being directed toward computing power.

This trend is already reshaping the labor market. Just a few years ago, computer science graduates considered programming one of the safest and most promising career paths. Today, employers increasingly look for specialists who can work effectively alongside AI rather than simply write code themselves.

Another interesting effect is emerging. Despite widespread layoffs in some areas, demand for certain roles continues to grow. In particular, machine learning experts, data center engineers, large language model specialists, AI infrastructure developers, and cybersecurity professionals remain highly sought after.

This creates a paradox: the tech industry is simultaneously laying off tens of thousands of employees while experiencing shortages in its most advanced segments.

Many analysts compare what is happening to the Industrial Revolution. Back then, mechanization reduced demand for certain jobs but also created entirely new industries. Today, a similar process is unfolding in the digital economy, only much faster.

However, it is important not to attribute layoffs solely to AI. Companies are also influenced by higher borrowing costs, pressure from shareholders, efficiency optimization goals, and the need to maintain profitability amid massive AI investments.

Still, the connection between artificial intelligence and job cuts is becoming increasingly clear. While automation once threatened primarily manual labor, it is now impacting professions that long defined the digital economy.

The key question is not whether programmers or IT specialists will disappear, but what the labor market will look like in five to ten years. History suggests that new technologies do not eliminate professions entirely but fundamentally reshape them.

For now, the statistics are symbolic. At a time when the world’s largest companies are investing record sums in artificial intelligence, the technology sector has become the leader in layoffs. This may be one of the first clear signs of how deeply AI is beginning to transform not only technology, but the labor market itself.