Plenty of companies blame artificial intelligence for their recent layoffs, but whether they’re being truthful about their motivations is up for debate.
U.S.-based employers revealed more than 97,000 job cuts in May, a 16% increase from the more than 83,000 they cut the month prior and 3% higher than last year’s total, according to data from Challenger, Gray, & Christmas viewed by TheStreet.
The May 2026 total was the highest for the month since 2020, when the Covid pandemic forced employers to cut nearly 400,000 positions.
The firm says it has seen “a jump in bankruptcy-related losses, which tells me companies are restructuring aggressively as they reposition for an AI-driven economy,” according to Andy Challenger, chief revenue officer for Challenger, Gray, & Christmas.
The tech sector was responsible for more than a third of those job cuts, and the 123,653 jobs it cut through the first five months represented a 66% increase year over year.
“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. Technology, already the year’s biggest job cutter, saw its steepest month of cuts since early 2023, even as it remains the sector with the most hiring plans this year,” said Challenger.
“AI isn’t yet the jobpocalypse some predicted. Like spreadsheets and email before it, the technology will ultimately make workers more productive, but our data shows companies are already acting on it, citing AI for more cuts than any other reason. The open question isn’t whether AI changes the workforce, but how fast.”
This week, payments network operator Visa became the latest corporation to cut thousands of jobs while blaming AI for the changes.
Visa cuts 2,600 jobs, cites AI as the reason
Visa has plans to cut about 7% of its more than 34,000 global employees, according to a memo viewed by CNBC and Bloomberg.
That means Visa is about to eliminate about 2,600 positions, mostly in its technology and product operations. The affected workers were contacted beginning Tuesday, July 28, regarding next steps and transition assistance, a source told CNBC.
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“To capture the opportunities ahead and best position Visa to lead this transformation, we must continue evolving how we work,” Visa CEO Ryan McInerney wrote. “AI is also helping to accelerate this evolution and shape the way work gets done at Visa.”
But AI wasn’t the only factor leading to the layoffs, according to CNBC’s source. The company wants to invest in growth areas, including affluent customers, cross-border activity, business payments, stablecoins, and geographic expansion.
Visa shares were trading 1.7% higher on July 28, ahead of the company’s earnings release after the closing bell.
Employers blame AI for job cuts
Sometimes employers blame one reason for layoffs when other causes may be more pressing. But regardless of whether they are being completely truthful, most are blaming AI for job cuts.
AI led all reasons for job cuts in Challenger’s data for the third consecutive month, but the 38,579 AI-related job cuts in May were the highest monthly total ever recorded for the reason since the firm began tracking it in 2023. AI accounted for 40% of all job cuts announced in May, up from just 7% in January, 25% in March, and 26% in April.
So far in 2026, employers have cited AI in 87,714 job cuts, or 22% of total job cuts. That total is already well ahead of the 54,836 that were attributed to the reason all last year.
But it’s not all doom and gloom, especially in the tech sector. While May’s job cuts were deepest in tech, the industry also led all others in hires. Technology led May hiring by a large margin with 11,250 announced positions. Electronics was the next-largest hirer, adding just 3,158 jobs.
