(The Wall Street Journal, Dan Gallagher and Asa Fitch, April 28, 2026)
Big tech companies are accelerating layoffs to fund the huge spending on chips and data centers for artificial intelligence, but this trade-off between people and machines could prove risky. March was the worst month for tech job cuts in the last two years, with companies like Meta, Microsoft, Oracle, Snap, and Block drastically reducing their workforce. While managers present layoffs as visionary moves for the AI era, markets are beginning to question the real costs of this investment race, which for big tech will reach $674 billion this year, more than double compared to two years ago.
Layoffs can temporarily improve efficiency metrics such as revenue per employee, a closely watched indicator by Wall Street, but they come with heavy side effects: morale drop, talent flight, greater difficulty managing customers and AI security, and the risk that former employees start competing startups. Furthermore, they fuel the public perception that artificial intelligence is primarily a job killer, increasing local resistance to building data centers.
Meta, for example, has seen its debt-to-equity ratio rise from 8% to 39% in five years. Staff cuts can make companies appear more efficient to investors but risk weakening innovation and long-term management capacity, especially if AI does not prove as transformative as promised. History teaches that sacrificing too much human resources to chase technology can create problems that are difficult to solve.
1. Record layoffs in tech
“Layoffs involving 45,800 tech employees were announced last month, making March the worst month for tech job cuts reported in at least two years, according to the monitoring site Layoffs.fyi.”
2. Race for AI investments
“Alphabet’s Google, Meta, Amazon.com, and Microsoft are collectively expected to spend $674 billion this year on capital expenditures, more than double what was spent two years ago, when AI spending was already considered high.”
3. Risks of staff cuts
“Widespread layoffs damage morale and create an incentive for other employees to leave, especially talent with alternatives. Despite all AI’s capabilities, people will be needed to understand business models, manage customers, and, importantly, ensure AI tools are implemented and used safely.”
4. Pressure on finances
“Even for tech giants that generate revenue and profits, those numbers are looking increasingly concerning. Debt for some major tech players is already rising: Meta’s debt-to-equity ratio was 39% last year, up from 8% five years earlier.”
5. Negative public perception
“Dressing layoffs as visionary moves for the AI era carries certain risks. […] Layoffs also lend credibility to a growing public perception that AI is not a panacea but a job killer.”
(Excerpt from the newsletter by Giuseppe Liturri)
