The tech industry faced extensive layoffs in 2025, notably by major firms such as Microsoft, Google, and IBM. While automation and AI's impact on jobs is frequently cited as a main reason, the reality involves freeing capital for AI investment. Companies are strategically reallocating resources to fund significant AI projects. Microsoft has notably let go of approximately 15,000 employees while investing heavily in AI infrastructure. Experts emphasize that current layoffs often focus on restructuring to support future AI initiatives, rather than replacing human roles with automation.
"These companies are freeing up capital to hire AI instead. It may seem like a neat distinction—but these experts say that these companies need the funds to make big bets on AI."
"Microsoft's AI ambitions have led to layoffs of nearly 6,000 employees in May, then another 9,000 in July; almost 4% of its global workforce. CEO Satya Nadella has revealed that AI now writes 20% to 30% of Microsoft's code..."
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