AI-driven job displacement is real, and it’s wreaking havoc in tech.
US tech layoffs are now at their worst year-to-date point since 2023, according to a new Challenger, Gray & Christmas report. The outplacement firm said US-based tech companies announced 52,050 job cuts so far in 2026, including 18,720 layoffs in March. That first-quarter figure was up 40% from the year before.
“Companies are shifting budgets toward AI investments at the expense of jobs,” Challenger said in a release. “The actual replacing of roles can be seen in Technology companies, where AI can replace coding functions.”
Challenger said AI was the leading reason for job cuts across industries, accounting for 25% of the total cuts in March.
Overall, Challenger said US-based employers announced 60,620 job cuts in March, down 78% during the same period last year, and overall job cuts fell year over year in the first quarter.
The company expects more layoffs from tech companies in 2026.
The tech total doesn’t account for Oracle’s recent layoffs, for which the software maker has yet to publicly reveal a total number of affected employees. Business Insider found dozens of Oracle workers who posted on their LinkedIn pages that they were part of the layoffs.
“My personal view on this, is that it’s not a good time to be in tech,” a former Oracle employee told Business Insider earlier this week. “It just isn’t.”
Oracle did not cite AI in its layoff notice sent to workers, though the move is widely viewed as an effort to curb costs as it continues a massive AI buildout.
Leaders at Atlassian, an Australian-American software firm, Block, and IBM have all cited AI in layoff decisions.
There’s a fierce debate about how much AI is at fault
The extent to which AI is to blame for the layoffs is contested, especially by AI model makers, such as OpenAI, whose advances in generative AI have fueled the current situation.
OpenAI CEO Sam Altman has said that some companies are “AI washing” layoffs by blaming the technology for cuts that would’ve happened anyway, but he’s not sure to what extent.
Other AI leaders, including Anthropic CEO Dario Amodei, have long warned about AI job displacement. Amodei, despite criticism from some of his contemporaries, has said he expects AI to wipe out up to half of all entry-level white-collar jobs over the next 1 to 5 years.
Kathy Ross, a senior director analyst at advisory firm Gartner, recently told Business Insider that AI likely isn’t directly taking jobs yet.
“AI might have played a role, but they’re not a result necessarily of AI successes,” Ross said. “Instead, the layoffs seem to be part of a broader strategy to reinvest funds in AI, hoping for success down the line.”
Challenger said AI is costing jobs,” even if it can’t completely replace them.
“One thing that is clear is that AI is changing work and the workforce,” the firm said. “Workers will need to be more strategic as they lead AI-powered agents that handle increasingly complex tasks. Human workers will need strong decision-making and judgment skills in the age of AI.”
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