AI was cited as the top reason for layoffs for the third straight month, accounting for 40% of all May cuts
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Outplacement firm Challenger, Gray & Christmas put the number of planned tech-sector eliminations in May at 38,242 — a figure not seen since August 2024. Through the first five months of 2026, no other industry came close to technology's 123,653 announced cuts, a total that represents a 66% increase over the comparable stretch of 2025.
Artificial intelligence was cited as the top reason for layoffs across all industries for the third consecutive month. AI-related cuts reached 38,579 in May — 40% of all job cuts announced during the month — the highest monthly total since Challenger began tracking the reason in 2023. That share has climbed from 7% in January to 25% in March and 26% in April. For the year, AI has been cited in 87,714 cuts, already surpassing the 54,836 attributed to the reason across all of 2025.
"The labor market is being reshaped by technology in real time," said Andy Challenger, chief revenue officer of Challenger, Gray & Christmas. "AI is now the leading reason companies give for cutting jobs and the primary industry citing it is Technology."
Overall, U.S.-based employers announced 97,006 job cuts in May, up 16% from April and up 3% from the same month last year. It is the highest May total since 2020, when pandemic-era cuts reached 397,016. Cuts have risen for three straight months, climbing from 48,307 in February.
FinTech companies reported 5,731 job cuts in May, most of them due to AI. Transportation and pharmaceutical sectors also saw big increases this year, with transportation layoffs up 449% compared to the same period in 2025.
The same Challenger data showed technology outpacing every other sector in new job postings as well, with 11,250 hiring announcements in May. Employer hiring plans industrywide have reached 80,472 for the year to date — an improvement over each of the previous two years, though well short of what was typical before the pandemic.
The surge in tech-sector cuts coincides with a broader reallocation of corporate spending toward AI infrastructure. Firms including Meta $META, Cisco $CSCO Systems, and Block $SQ have each cited AI as a driver of restructuring. Meta began notifying roughly 8,000 employees of layoffs last month, framing the cuts as necessary to fund its push into artificial intelligence.
Outside of technology, layoffs have stayed relatively limited. Andy Challenger said these numbers point to a structural change, not just a temporary trend. "AI isn't yet the jobpocalypse some predicted," he said. "The open question isn't whether AI changes the workforce, but how fast."
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