More tech companies are carrying out large-scale layoffs, citing AI investment and expanded efficiency. Some see it as unclear whether the moves will lead to the intended results.

A Challenger, Gray & Christmas report in early April said U.S. tech companies have announced 52,050 job cuts so far in 2026, including 18,720 in March alone. First-quarter layoffs in the tech industry rose 40 percent from a year earlier.

Block, the fintech company behind Square and Cash App, said in February it would cut its workforce by 40 percent. Oracle and Snap have also begun large-scale layoffs over the past few weeks. More recently, Microsoft and Meta announced plans for major job cuts citing AI.

Meta laid out a plan to cut about 8,000 jobs. Microsoft began a voluntary separation program for U.S. employees. If not enough people leave voluntarily, it is expected to lead to large-scale layoffs.

According to a recent Wall Street Journal report, companies carrying out layoffs want them to be seen not as a sign something is wrong, but as confidence in a future in which AI replaces many workers. Jack Dorsey (잭 도시), Block's CEO, also said when announcing the layoff plan that it was "not a decision made because things are hard."

The race among big tech companies to invest in AI infrastructure is intensifying. Borrowing the Wall Street Journal's phrasing, the companies are in a game of chicken over capital spending.

The companies are spending huge sums on AI chips and building data centres, saying they must do so to lead the AI race. Combined capital spending this year by four tech companies—Alphabet, Google's parent, Meta, Amazon and Microsoft—is expected to reach $674 billion. That is well more than double the level of two years ago, when AI enthusiasm was already rising.

Amid these conditions, competition is intensifying among companies seeking to show they can do more with AI. The Wall Street Journal reported that this is leading companies to plough the savings from layoffs back into investments in expensive chips.

Tech companies hired heavily during the COVID-19 pandemic and have been shedding weight through layoffs in recent years.

Tech companies believe operations will not suffer even if they reduce headcount. Since revenue per employee is widely seen as a key metric for measuring efficiency, there are also signs some view layoffs as a way to appeal more to investors.

But it is uncertain whether the outcomes will match what tech companies intend and want.

According to the Wall Street Journal, efforts by tech companies to package layoffs as foresight for the AI era could lead to unintended risks.

First, large-scale layoffs can hurt employee morale and drive other workers to leave. The Wall Street Journal reported that no matter how capable AI is, companies will still need people who understand the business model, deal with customers and, more importantly, ensure AI tools are safe.

Layoffs could also reinforce public perceptions that AI is the main culprit in reducing jobs. That could strengthen anti-AI sentiment or moves to regulate it. For companies pouring massive funds into staying ahead in competition, a rise in backlash against AI is the scenario they most want to avoid, the Wall Street Journal reported.

Large capital spending plans are also not always well received by investors. Recently, a sense of concern has been growing. Tesla shares fell 4 percent after it raised its spending target to $25 billion this year, the Wall Street Journal reported.