US Tech Sector Announces Its Highest Layoffs In Almost Two Years; The Reason Is…

The US technology sector announced the highest layoffs in almost two years in May as companies pumped investments into artificial intelligence.

The tech sector planned to eliminate 38,242 positions last month, the highest for the industry since August 2024, data from outplacement firm Challenger, Gray & Christmas Inc revealed.

The industry has announced 123,653 cuts so far this year, an increase of over 65% from the same period in 2025.

The total private sector layoff announcements were down 7% over the last five months compared to the same period a year ago. This reinforces the “low-hire, low-fire” environment prevalent in the job market.

Andy Challenger, chief revenue officer of Challenger, Gray & Christmas Inc. said AI was the main reason for the layoffs in the sector.

Artificial intelligence has been cited as the reason for 87,714 job cuts, or 22% of all layoffs so far this year, far more than the 54,836 firings attributed to AI in the entirety of 2025.

“The labor market is being reshaped by technology in real time. AI is now the leading reason companies give for cutting jobs and the primary industry citing it is Technology,” Challenger said.

Challenger added that the tech sector also remains the industry with the most hiring plans this year.

In May 2026, US employers announced 80,472 planned hires, slightly more than the 79,741 announced a year ago. This was better than the past two years. However, the data was still far below totals for the same period in each year from 2019 to 2023, Bloomberg reported.

Technology alone had 11,250 planned hirings. Electronics, insurance and energy industries followed.

In May, several big names in the tech industry announced mass firings, including Meta and Cloudflare.

Meta laid off 10% of its workforce and also reassigned 7,000 workers to focus on AI initiatives.

Cisco fired 4,000 employees, and admitted that the layoffs were due to AI adoption, Forbes reported.

Cloudflare CEO Matthew Price stated that his company would lay off 1,000 employees or 20% of its total workforce. He stated in an op-ed that his firm had massively increased AI usage in recent months and consequently, did not need operations experts, middle managers or sections of its finance, auditing, legal and compliance teams.