While companies – particularly technology companies – continue to invest billions of dollars in AI technology, they are cutting employees by the thousands as many have feared would happen.

Amazon layoffs have generated debate over whether AI efficiencies are genuinely driving corporate downsizing—or if companies are using AI as convenient cover for cost-cutting measures.

Amazon made big news this week by revealing it would lay off 14,000 employees and tens of thousands more could be on the chopping block. But Amazon is not unique there. This is now part of a trend across corporate America.

The Wall Street Journal pointed to the embrace of AI as partly to blame for large layoffs earlier this month at United Parcel Service, Target, Rivian Automotive, Molson Coors, Booz Allen Hamilton and General Motors. The Journal described this trend in its headline “Tens of Thousands of White-Collar Jobs Are Disappearing as AI Starts to Bite.”

Also, Meta, Google and Microsoft have also made cuts or disclosed cuts are coming related to AI in the last six months.

AWS Layoffs: Was AI a Driver or Smokescreen?

These cuts come as many still question how much value AI is delivering to companies. With the technology still largely in the evaluation and pilot stage, can companies be seeing enough efficiencies to justify massive staff reductions?

The Amazon layoffs were foreshadowed by a message to employees that CEO Andy Jassy posted online last June titled “Some thoughts on generative AI.” Jassy drew a straight line from more AI usage to fewer workers required.

“As we roll out more generative AI and agents, it should change the way our work is done,” Jassy wrote. “We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs. It’s hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company.”

Beth Galetti, Amazon’s SVP of People Experience and Technology, released a note she sent to employees explaining the layoffs.

“The reductions we’re sharing today are a continuation of this work to get even stronger by further reducing bureaucracy, removing layers, and shifting resources to ensure we’re investing in our biggest bets and what matters most to our customers’ current and future needs,” she wrote.

Galetti didn’t mention AI until the second-to-last paragraph of her six-paragraph memo, when she wrote that it requires Amazon to be “organized more leanly.”

“This generation of AI is the most transformative technology we’ve seen since the Internet, and it's enabling companies to innovate much faster than ever before (in existing market segments and altogether new ones). We’re convinced that we need to be organized more leanly, with fewer layers and more ownership, to move as quickly as possible for our customers and business.”

At least one cloud expert isn’t buying it. In a LinkedIn post titled “Amazon’s AI Excuse: Why We’re Not Buying It,” David Linthicum of Linthicum Research wrote: “Amazon needs to be more honest with the public, employees, and investors. We see right through this narrative. Layoffs on this scale—especially targeting HR and operations—are almost always about cutting costs, consolidating management after overexpansion, and responding to Wall Street scrutiny. The AI explanation feels, at best, opportunistic. At worst, it’s a distraction.”
Linthicum said Amazon most likely shed 14,000 workers because of “post-pandemic adjustments, overhiring, and mounting pressure from shareholders to bolster profitability” rather than “some sudden revolutionary gains from AI automation.”

He concluded: “Hiding behind AI as a smokescreen does a disservice not only to the workforce but also to the credibility of the industry as a whole.”

Sky Canaves, an eMarketer analyst, told Reuters that Amazon’s connection between AI and layoffs was also likely related to its heavy investment in the technology.

"This latest move signals that Amazon is likely realizing enough AI-driven productivity gains within corporate teams to support a substantial reduction in force," Canaves said. "Amazon has also been under pressure in the short-term to offset the long-term investments in building out its AI infrastructure."